The Inland Revenue has put on hold plans to allow millions of taxpayers to communicate with the department by e-mail because of security concerns.

This is the latest in a series of computer problems to hit the Revenue.

Last month it suspended its online self assessment service because of a security lapse.

Setting up the network of computers necessary for the national e-mail service has so far involved 55,000 computers, at an estimated cost of �200m.

But, the Revenue told staff in an internal publication - the ReveNews - that it was concerned about hackers intercepting e-mails or pretending to be Sir Nicholas Montagu, chairman of the board of the Inland Revenue.

Delayed plans

The Revenue said that ensuring the security of confidential information was vital.

A spokesman, said: "This was a trial involving 300 staff. That pilot has now come to an end.

"The point of it was to identify and iron-out any problems. We will now analyse the results of the pilot before deciding how to proceed."

A new trial is expected next year.

Under the Revenue's public service agreement with the Treasury, the Revenue said earlier in the year that a key objective was "to provide an e-mail facility for customers to contact the Inland Revenue office by 2002."

In an interview the BBC News Online earlier in the year, Sir Nicholas spoke of his passion for getting the Revenue online.