Council chiefs apologised to more than 1,300 people after admitting data containing their bank details, names and addresses had been lost in the post.

People whose details were on the list have been warned to check their bank accounts in case the data stick, a small computer memory device, has fallen into the wrong hands.

We have looked very hard for it

The chief executive of Wiltshire County Council said the data on the stick had been encrypted and protected with a password, but that their rules for sending information of this sort had not been followed and an investigation had been launched.

To pile more embarrassment on to the council bosses, it appears the data was only in the post in the first place as part of the controversial move from five councils to one – the names and details of 1,385 housing benefit claimants in the Salisbury area were held by the council there but had to be sent to, and then returned by, the Trowbridge-based Wiltshire County Council because the local authorities are merging to become a unitary authority in April.

Chief executive Keith Robinson told those whose data had been lost that the data stick was put into an envelope and sent back from Trowbridge to Salisbury, but the envelope ripped and the data stick fell out.

In a letter to those affected, Mr Robinson said: "We have looked very hard for it and I am afraid that we have not been able to find it. The memory stick information included your name, address and bank details, which we hold in order to pay your benefits.

"We do not think that you are at any significant risk, because the information on the memory stick is secure. Although the risk is low, the advice is that you should monitor your bank statements carefully to make sure that there are no unexplained transactions.

"If you see any unexpected payment coming out of your account, you should contact your bank immediately to query it. You might like to keep this letter to show your bank if you need to query any transactions that you think might have arisen because someone has misused your personal details."

Wiltshire County Council contacted the national information commissioner when the security breach was discovered, and said an investigation was under way.

Mr Robinson said: "We very much regret the loss of this data and I am apologising to all those covered by the data.

"We have clear procedures for sending data and on this occasion they were not followed. We are investigating why this happened."

He added: "In the light of this error, I am commissioning a review into our data security, by our audit and IT services.

"I shall report publicly on the review to the council's executive not later than May."

Hard to believe another slip-up