According to Applied Digital Systems, the US-based company that makes the chips, the FDA approved its RFID chips on Wednesday for use in hospitals on humans. The approval came after a year-long review.
The VeriChip, which is about the size of a grain of rice, is designed to be injected into the fatty tissue of the arm. Using a special scanner, doctors and other hospital staff can fetch information from the chips, such as the patient's identity, their blood type and the details of their condition, in order to speed treatment.
However, for security purposes personal information is not stored on the chip. Instead the chip contains a unique number - like a barcode - that links to a medical record stored on a secure database.
But Australian privacy advocates, who were already wary about similar chips being used by retailers to help manage their supply chain, are furious that humans could be chipped and wonder how long it will be before the first Australians are implanted.
Roger Clarke, a privacy advocate who has been speaking out against RFID-type technology for more than a decade, said he was "appalled and stunned" at the naivete of both the people developing the technology and the way it is being reported in the general press.
"When I spoke about this in 1994 people said I was going to extremes and talking nonsense. Now, less than ten years later they have a commercial product. I cannot understand how naive people are," said Clarke.
Clarke has argued that although the US solution is a simple identifier chip and can only be used with the consent of the patient, it won't be long before the technology goes mainstream.
"We are always going to tag the institutionalised first -- because they are prisoners and we have power over them. But we are also going to tag grandma in the senile dementia ward," said Clarke.
"This is a unique identifier. You will be walking down the street saying hey, this is my number, because your chip is promiscuous and it will talk to any bloody thing that wants to talk to it. It is unbelievable," Clarke added.
However, a spokesperson from the Australian Institute of Criminology (AIC), a Commonwealth statutory authority, said Australia has never electronically tagged any of its criminals and has no plans to do so in the future.
"Tagging of criminals is not even on the agenda," the spokesperson said.
Dale Clapperton, a board member for Electronic Frontiers Australia, a non-profit organisation that represents the on-line rights and freedoms of Internet users, said he is just as worried about RFID chips being used in every day objects such as driving licences and passports.
"If we went down the path of putting RFID tags into driving licenses - which has been suggested in some parts of the US -- you could have a situation where anyone with the right equipment could read information from your licence from a few metres away," Clapperton said.
Any type of RFID chip - whether inserted inside the body, in a document or item of clothing - will affect an individual's privacy, said Clarke.
David Vaile, executive director of the Baker & McKenzie Cyberspace Law and Policy Centre at the University of NSW, said the US Patriot Act makes it unclear exactly which information is protected and which is readily available.
In addition, he said that because RFID chips are unlikely to ever be removed once they are inserted, and RFID scanners are becoming more common, the privacy issues are spiralling out of control.
"If you jumped into boiling water you would jump right out again. But what happens when the temperature is gradually raised? This looks like another increment and the water is not cool any more -- it is actually getting quite warm," said Vaile.