Criminals have stolen the identities of more than 1,000 babies who died before their first birthdays, a report has revealed.

The House of Lords' European Union Committee report on illegal immigration said the practice was exposed by a police check on data in the Passport Office, codenamed Operation Wisdom.

Lack of resources in the police forces concerned ...has prevented these findings being followed up until very recently

House of Lords report

It discovered applications for passports, driving licences and National Insurance numbers had been successfully made using details of children who died many years ago.

However, because of a shortage of manpower, many cases are still waiting to be investigated and only 39 arrests have, so far, been made.

There are also believed to be many unreported cases, requiring further investigation.

"Lack of resources in the police forces concerned as a result of other priorities, not least the Street Crime Initiative, has prevented these findings being followed up until very recently," the report states.

The peers also said both the National Crime Squad and the National Criminal Intelligence Service felt organised illegal immigration had to be tackled in the same way as drug-smuggling.

They agreed illegal immigration posed a "serious problem" to the EU as a whole and condemned trafficking in human beings as a "pernicious crime".

They also claimed Tony Blair's crackdown on street crime had diverted resources away from the problem of tackling identity theft.