The Office of the Information Commissioner will only support the introduction of an entitlement card if it believes it will be beneficial enough to outweigh the risks to privacy, human rights and social values.
According to those familiar with the issue, the Office of the Information Commissioner is currently considering whether there are real pressing needs that are not currently being satisfied, and would be best addressed by the introduction of an entitlement card.
It is also understood to favour the idea that an independent body should be created to oversee the administration of such a scheme and manage the resulting database, as a way of safeguarding the project from political interference.
Back in July 2002 the UK government launched a six-month consultation into entitlement cards, which it claims could help combat fraud and identity theft, and deliver public services more effectively.
The Office of the Information Commissioner is due to release its response to this consultation at the end of January. If it opposes the idea, then it could be much harder for the government to introduce such a scheme.
Although the government insists that entitlement cards are not identity cards "by the back door", some privacy advocates have deep concerns.
"The government has failed to establish a convincing case for the card. The consultation has been a sham from the word go," said Simon Davies, Privacy International's director, earlier this year.
"An ID card is costly, dangerous and unnecessary. Many of the responses reflect this view. Many also complain about the sheer arrogance of government in the way it has managed the consultation," Davies added.