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An inquiry has been launched after a memory stick with user names and passwords for a key government computer system was found in a pub car park.
Subcontractor Atos Origin, which lost the stick, said there had been a "direct breach" of its procedures.
It said the matter was being taken "extremely seriously" but the integrity of the website, which is temporarily closed, had not been compromised.
Prime Minister Gordon Brown said the company would have "to explain itself".
The data breach is the latest in a series of embarrassing blunders regarding government information.
Work and Pensions Secretary James Purnell issued an apology on Saturday after he left confidential ministerial correspondence on a train.
Mr Brown said Cabinet Secretary Gus O'Donnell was sending out fresh instructions to ministers over how sensitive data must be handled.
"There are very strict rules about information being outside buildings and these have to be followed," he said.
"This recent case with a private company, where information about individuals has been lost, makes me even more determined that we will root out this problem about leaving things around."
Mr Green, 52, MP for Ashford, expressed fury after he was questioned in connection with a series of confidential Home Office papers which have found their way into the public domain recently.
He was released on unconditional bail shortly before midnight without charge, but must return to face further questioning in February.
Speaking to reporters outside the House of Commons, he said: "I was astonished to have spent more than nine hours under arrest for doing my job. I emphatically deny I have done anything wrong."