New national Identity Cards could come with Pin numbers to check holders' identities, the Home Office says.
PIN numbers could be one of a few ways of verifying identities
Minister Andy Burnham said Pins could be used as an "intermediate" check.
Anti-ID card campaigners say plans to use Pins show the cost of checking identities by fingerprints or iris scans would "bankrupt" the project.
Meanwhile, the Identity Cards Bill is due to return to the House of Commons after suffering a third defeat in the House of Lords.
It had previously been thought that banks, government departments and other businesses would use biometrics - including fingerprint, iris and face scans - to verify identities.
"A Pin number would be a new intermediate way of checking a card was authentic," Mr Burnham said.
"The verification services that could be offered would be applied appropriately according to the business process that was involved," he said.
That could range from a visual check to use of a Pin number to, in the case of "high-value transactions", biometric verification, he added.
Mr Burnham conceded that the Pin number was "partly" being proposed because of the cost of biometric readers.
Phil Booth, of anti-ID card campaign group NO2ID, said the Pin number was "technology that criminals and thieves have already compromised".
"The Home Office has publicised this whole scheme as being highly secure and based on the magic of biometrics," he said.
"But the reality is that the only scheme they have a practical hope of pulling off is a bog-standard smartcard with a Pin number.
"The network of biometric readers alone would bankrupt the project and that is why they need to rely on a Pin number."
Shadow home secretary David Davis said the announcement was a "tacit admission" that the government was having "grave difficulties making the biometrics work".
"They have gone from what they represented as a secure 'gold standard' to a makeshift substitute," he said.
Liberal Democrat spokesman Nick Clegg questioned the need for both Pin numbers and biometrics.
"In every other country which has ID cards it is sufficient just to show your card to verify your identity yet ministers here are already fantasising about the many additional controls which it can add to an ID card," he said.
"The Government should not be surprised that no-one wants such a heavy-handed scheme imposed on them through compulsion by stealth."
In the Lords on Wednesday, peers voted by a majority of 35 to keep the ID card scheme voluntary.
The government wants to make it compulsory for applicants for new-style biometric passports to have their details entered on a national database.
Ministers have threatened to use the Parliament Act to get the Bill through without Lords approval.