The private firm which lost the details of the entire prison population is being allowed to continue working on the controversial project to build a database of every child in England
PA Consulting was branded "completely unacceptable" by ministers and lost its three-year contract with the Home Office after an employee mislaid an unencrypted memory stick containing the names, addresses and expected release dates of all 84,000 prisoners in England and Wales.
Its other contracts with the Home Office, worth £8million a year, are now under review.
But the firm is being allowed to continue working on the highly sensitive £224million ContactPoint scheme to create a computerised record of the names, addresses, dates of birth, parents, schools and GPs of all 11 million children in England, which has already been delayed by security concerns.
Critics said the involvement of PA Consulting – which is also working on the national ID card scheme – in the project should lead to it being scrapped completely, before any serious mistakes can be made.