The number of victims of ID fraud in the UK rose by a third in 2009 compared to the previous year, said the CIFAS.
According to research by the UK's Fraud Prevention Service, which was conducted for National Identity Fraud Prevention Week, ID theft is costing the UK £1.2bn a year.
The CIFAS also said account takeover, which sees cybercriminals hijack a victim's account and steal all their money, is the most popular form of ID fraud.
Life assistance company CPP ays account takeover is responsible for 40 percent of all of the UK's ID theft.
"These figures are worrying and show that identity fraud in all its guises continues to be a serious threat," said Michael Lynch of CPP.
"It's vital that people remain alert and regularly check their banks statements for suspicious activity. The fact that fraudsters are targeting existing accounts in increasing numbers is a consequence of tighter lending and switching their criminal activities to existing account holders where credit is readily available."
The research also revealed that nearly two thirds of consumers and a third of UK employees throw documents containing sensitive personal data straight into the bin, instead of shredding them first.
When it comes to UK businesses, nearly 75 percent of UK employees said they thought their company could do more to protect customers data, while 36 percent admitted they were unsure if their company had a policy on protecting sensitive data.
Only one in five consumers said they regularly check their credit card statements for unusual behaviour while less than half of Brits chase up expected mail which has not arrived.
"People are either naive or they continue to ignore the advice that could keep their identity, their finances and their reputation safe," said Tyron Hill, a spokesman for National Identity Fraud Prevention Week.
"Even simple steps, like thoroughly shredding any documents with your name and address on them, will help to minimise your exposure."