But Mr Robert’s spokesman rejected comparisons to the Australia Card, saying the digital identity system was completely controlled by the user and did not come with a single identifier that could be used to track people.

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The system was designed to ensure that whichever agency vouched for a user’s identity would not know what services they used, and those services would only get the necessary identity information. Privacy protections in the system been independently assessed and were backed by rules in the government’s bill, the spokesman said.

“With Digital Identity, only the information that is required is shared and it’s also clear what information is being provided to the service,” the spokesman said.

Privacy advocates are concerned that the proposal has the potential to create a lifelong store of data that governments could be tempted to link together, enabling discrimination or surveillance.

“A digital identity system, it has the highest risk of undermining the core driver of data protection regulation in the modern world, which is you can have personal info, use it, or even transfer it for the purpose it was collected,” said Mr Vaile. “But you can’t create a massive dossier of everything you’ve collected and use it for whatever you like.”

James Clark, the executive director at advocacy group Digital Rights Watch, agreed and said governments were “pushing ahead with a pretty fraught proposal without a proper debate”.

In recent years Australians have largely acquiesced to government digital services. Government figures show more than 7 million Australians are already using a federal digital ID system called MyGovID to log on and access government services.

While Australians have also enthusiastically adopted social media services that use extensive customer data, breaches involving companies such as Facebook have thrown a spotlight on privacy issues.

Mr Robert’s spokesman said the digital identity system was reducing fraud, helping citizens access government services at any time of day or night and improving privacy.

“We are working closely with the states and territories to ensure we’re able to support identity verification for services across all levels of government,” the spokesman said.

A NSW government spokesman confirmed the state was working with the federal government on the project, which would be opt-in. “Both governments are committed to keeping customer trust, privacy, security and robust fraud protection design principles at the core of the program,” the spokesman said.

A Victorian government spokesman did not respond to a request for comment by deadline.

Paul Nicolau, executive director of Business Sydney, praised the NSW government’s increased use of digital services.

“Digitisation of data has been a great leap forward for business and consumers as shown with the ease of vaccination proof shared data between Federal and NSW Government,” Mr Nicolau said.

“It has saved businesses time and money in safeguarding customers and sped up other interactions and the interface between consumers, businesses and government service.”

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