Ministers have come under fresh pressure in the Lords to introduce a national identity card to combat fraud.

Labour's Lord Campbell-Savours said ID cards could help tackle an "explosion" of identity fraud and prevent "free-loaders" taking advantage of the tax system.

In a short debate, he accused the previous coalition government of having destroyed the national identity register system when other European nations were forging ahead with their own schemes.

This had left the country "exposed to an explosion in identity fraud and crime which permeates every aspect of our national life".

Lord Campbell-Savours said a national identity card with sophisticated biometric data would help cut fraud and establish entitlement to public services.

He suggested it could also help tackle "free-loaders" who paid little or no income tax despite having substantial incomes by living "outside or on the margins" of the tax system

"We who pay our taxes resent the free-loaders whether they be foreign or UK nationals. It's costing the country billions. A national identity card with relevant biometric data would be a powerful tool in ensuring people paid the state for the services they receive."

The idea for ID cards was first floated by the Labour government in 2003 but the project was scrapped by the coalition in 2010.

Senior MPs recently called on the Government to reconsider the introduction of national identity cards to boost national security and combat terrorism.

But Liberal Democrat Lord Scriven challenged the benefit of ID cards in combating crime and terrorism, insisting that both France and Indonesia had them but this had not prevented atrocities in those countries.

"We would be undermining those very British values of freedom and civil liberty and the criminal and terrorists would win if we were forced to have a compulsory ID card," he said.

Former Met Police commissioner Lord Blair of Boughton also backed ID cards as "an idea whose time has come".

Lord Blair said false identities were a "staple terrorist tactic" and in these "troubled times" the police and security services had an "increasingly desperate concern ... to establish the identity of individuals".

The independent crossbench peer, citing cases like the fifth bomber in the failed London attacks of July 2005, said it was absurd that the police could not establish the true names of such criminals.

"What links might we have been able to establish to other plots and other people had there been a system of ID cards in place is pretty obvious."

Lord Blair said no one he knew in the police or security services saw a need for people compulsorily to carry identity papers in the street.

"But in the case of serious crime and terrorism the police need as soon as possible to establish identity.

"It wouldn't be difficult to create a system which wouldn't be intrusive but would be of huge assistance in those inquiries."

Insisting that troubled times were "on our very doorstop", Lord Blair said he had never understood the Conservative Party's opposition to ID cards.

"After Paris, after Istanbul, after Jakarta, I don't think the public will understand why the Conservative Party is still resisting the idea. It's an idea whose time has come."

Liberal Democrat former director of policy and communications Lord Oates said ID cards were a "very bad idea", which would fundamentally alter the relationship between the state and its citizens as well as "violating the fundamental traditions" that had kept the UK's liberties safe.

"For the first time the state would have the power to demand information from every person in the land simply because you exist," he warned.

For Labour, Lord Rosser said the case for ID cards deserved to be considered carefully in the light of increasing identity fraud, the threat of terrorist activity and apparent levels of illegal immigration.

He urged ministers to set up a review of the advantages and disadvantages of an identity card system.

Home Office minister Lord Bates rejected calls for the introduction of ID cards, insisting they weren't the way forward.

Lord Bates said the system proposed by Labour failed "essential tests" and was expensive. There were already a large number of "established and robust" identity documents like passports and driving licences.

Denying that the Tory party was ideologically opposed to ID cards, he said that for 10 years "we have made very clear we don't believe this is the way forward".

Neither the police nor the security services had made representations for the cards to tackle fraud and crime. But they had asked for additional powers put forward in current counter terrorism and investigatory powers legislation.