U.K. Home Secretary Jacqui Smith blames PA Consulting, a contractor that stored the data on the memory stick in violation of its contract.
Citing failed government promises to protect information, a BBC television anchor asked Smith, "When is data going to be safe?"
"Let me be quite clear," Smith told the BBC. "This is data that was held in secure form that was then downloaded onto a memory stick by an external contractor. It's completely unsatisfactory. It runs against the rules set down both for the holding of government data and, in fact, set down by the external contractor."
Smith said the U.K. government is investigating the incident and carrying out a risk assessment.
PA Consulting did not immediately respond to a request for comment.
Data loss has become a matter of particular sensitivity in the U.K. following revelations in November last year that discs containing information about 25 million U.K. residents' child benefits had been lost.
Data loss has also become quite common as the volume of data available has increased and the size of portable storage devices has decreased, not to mention the rising sales of laptops in relation to desktop systems.
In the United States this week, educational testing company the Princeton Review accidentally exposed the personal data and test scores of tens of thousands of Florida students on its Web site; Dominion Enterprises disclosed that a computer in its InterActive Financial Marketing Group division, containing personal details about 92,000 credit seekers, had been hacked; and Kingston Tax Service reported the theft of a laptop containing information about an undisclosed number of clients.