OTTAWA - The federal privacy watchdog says Canadians applying for passports face serious security risks because of weaknesses in every step of the process.

Privacy Commissioner Jennifer Stoddart found problems in how personal information is collected, stored, used and ultimately discarded.

For example, passport applications and supporting documents were kept in clear plastic bags on open shelves, says her annual report to Parliament on Thursday.

Papers containing personal information were sometimes tossed into regular garbage and recycling bins without being shredded.

And some documents that had been shredded by a private contractor could easily be put back together.

"These privacy and security shortfalls are particularly worrying given the high sensitivity of the personal information involved in processing passport applications," the report says.

"There is a risk that this information could be used for nefarious purposes if it wound up in the wrong hands."

Passport Canada, an agency of the Foreign Affairs Department, processed more than 3.6 million passport applications in 2006-2007.

The information people provide on their application forms, supporting documentation, and passports themselves all include highly sensitive personal data, including credit-card information, names, addresses, birth dates and sometimes Social Insurance Numbers, Stoddart notes.

"There is a risk of consequences -- identity theft, for example -- to individual passport holders if their personal information goes missing or is stolen. It's clear that stronger safeguards are required to protect this data."

The commissioner made 15 recommendations, including hiring a chief privacy officer at Passport Canada, better training for employees, and stricter controls on sensitive information.

Stoddart said Passport Canada and Foreign Affairs have agreed with most of her recommendations.

Three years ago, Auditor General Sheila Fraser uncovered significant weaknesses at the passport agency, citing the potential for abuse. The following year it emerged that an alleged Russian spy used a fake Ontario birth certificate to obtain passports in 1995, 2000 and 2002.