Police have made an arrest over the sale on eBay of a computer said to contain the personal details of thousands of council tax payers.
A criminal investigation was launched after the names and addresses, bank account numbers and sort codes of people in the Charnwood Borough Council area of Leicestershire were reportedly found on its hard drive.
Other personal details, including conversations about householders' divorces and family bereavements, were also reported to be on the computer, which was sold on the auction website for Å6.99.
The apparent security breach emerged on Wednesday, a day after it was disclosed that a computer storing information on up to one million bank customers was sold on eBay for Å35.
Yesterday a Charnwood Borough Council spokeswoman said the local authority had ``acted swiftly to contain the situation''.
She said: ``We have traced the hard drive and are currently retrieving it. The purchaser is co-operating with Charnwood and has stated that the data has not been distributed to any other parties.''
She said the case had been referred to Leicestershire Constabulary, adding: ``We can confirm that an individual has been arrested and is assisting the police with their inquiries.
``As this is now a criminal investigation, the council is unable to make any further comments at this stage. We have also notified the Information Commissioner of this incident.''
Council leader Richard Shepherd said: ``I regret the concern caused to Charnwood residents by this serious matter. We have worked vigorously to investigate the case.
``I am pleased that we have quickly been able to identify and track down the hard drive and deal with the situation appropriately. We will give every assistance to the police in their further investigations and I will personally ensure a thorough review is also completed by the council to find out how this happened.''