The Home Affairs Committee has called for a reduction in the unnecessary collection of data on UK citizens.
The move comes just weeks after the government shortlisted five IT suppliers on its ID card project and after plans were revealed that it wanted to make a database of all phone calls and emails in the UK.
Last week, IT industry commentators speaking to Computerworld UK said the government should also urgently reconsider the £12.4bn NHS IT programme for a centralised database of patient records. And last year, HM Revenue & Customs lost 25 million child benefit records.
In its report, called 'A Surveillance Society? ', the Home Affairs Committee called on the government to "adopt a principle of data minimisation", and only hold data "for as long as is necessary". The government should "resist a tendency to collect more personal information and establish larger databases", the committee said.
The committee said that the government's assurances that it has learned lessons from the high profile data losses "though welcome, are not sufficient to reassure us or, we suspect, the public".
It is "particularly concerned" about attempts to use patient data, or information held on children for the purposes of predictive profiling for future criminal behaviour, and said "the Home Office must not undertake or sponsor work of this sort".
It called for "Privacy Impact Assessments" recommended by the Information Commissioner to be used as a risk-analysis tool before surveillance projects are started.
Keith Vaz MP, chairman of the committee, said: "What we are calling for is an overall principle of "least data, for least time". We have all seen over the past year extraordinary examples of how badly things can go wrong when data is mishandled, with potentially disastrous consequences."
He said the government should not collect more data "just because the technology allows it", nor should it use the data beyond the purposes it is initially collected for.
The committee set out what it called 'ground rules' in order to prevent "unnecessary surveillance", and protect citizens' data. It said the government should minimise data collection and large databases, prove the need before starting data collection projects, take responsibility for safeguarding information and not hold information longer than necessary.
More secure systems were needed to protect data, it said, as well as contingency plans in the event of biometric information being stolen.
The government should explicitly address questions being asked around collecting data, including using microphones on security cameras, and it should not routinely use the national identity register to monitor the activities of individuals, the committee said.
It also called for the Information Commissioner to provide an annual report on the government's surveillance projects.