The Home Office will fund a unit to specifically police e-crime, secretary of state Vernon Coaker told a House of Lords science and technology committee today.

The unit will not sit inside the London Metropolitan Police Service (Met), as first proposed, but will instead be the law enforcement arm of the National Fraud Reporting Centre (NFRC).

Coaker said that the Home Office recognised there was a gap in policing that needed to be plugged.

"Within reason, the Home Office will look to fund a law enforcement capability alongside the NRFC, but we haven't got a budget for this yet," he said.

The system Coaker envisaged would see all types of e-crime reported to the NRFC, including non-fraud related e-crime.

The law enforcement arm of the unit would then investigate cases in the same way the National High Tech Crime Unit (NHTCU) did before the organisation was rolled into Soca in April 2006.

The move attracted criticism from the private sector which felt it no longer had anywhere to report e-crime.

Coaker said he will meet all concerned law enforcement agencies next month -including Soca e-crime, the Met hi-tech crime unit, and the Child Exploitation and Online Protection Centre (CEOP) - to discuss how the proposed unit will dovetail with their respective responsibilities.

The NFRC is expected to receive around £50m of Home Office funding.