The government said it is not ready to carry out an electronic national census in 2011 or to use information stored on existing databases despite claims that such a move would save £250m.

Think-tank the New Local Government Network said the census, carried out every 10 years, should scrap door-to-door information-gathering and rely on data matching using information from public service sources.

But the Office of National Statistics (ONS) said that a strategic review of alternatives showed the paper-based census was "still regarded as the most authoritative source of information" supporting multi-variate analyses "not feasible using other data sources".

The ONS said that most data will be captured and coded from paper census forms but respondents will be able to input their own data online, and it promised that once the electronic archive is complete, the underlying questionnaires will be destroyed.

The organisation has also played down fears over who will have access to the information collected.

Police and security service agents have the right to request access to the data under certain circumstances subject to the approval of the UK Statistics Authority, but it will not be available to the Home Office and specifically not for the identity card scheme.

The government also rejected fears that outsourcing the data handling to US firm Lockheed Martin could compromise security.

An ONS white paper said that "neither Lockheed Martin UK nor any Lockheed Martin employee will have access to personal census data".

It said: "All census data is owned by the Office of National Statistics and will be processed in the UK.

"Lockheed Martin will be acting as the prime contractor and will develop the systems to be used to handle and process the census data, but access to the data itself will be restricted to a consortium of subcontractors who are based in the UK and either UK or EU owned and will be protected to the standards required by the Data Protection Act 1998."

Lockheed Martin supported the 2001 UK census and has extensive international census experience, most recently the 2006 Canadian census.

The US Patriot Act allows US law enforcement agencies to demand information from private sector companies, and the Commons Treasury Committee had called on the UK government to obtain clear legal advice from the US State Department and to publish the outcome.

But the white paper gave no indication whether the State Department had been approached and, if it had, what guarantees it had given to the UK government.