The government has abandoned plans for a giant new computer system to run the national identity cards scheme.
Identity cards are due to be introduced in 2009
Instead of a single multi-billion pound system, information will be held on three existing, separate databases.
Home Secretary John Reid said it would save cash, but the Tories said ID cards were still a £20bn "white elephant".
All non-Europeans already in the UK will also have to register fingerprints or iris scans from 2008 not just new arrivals, Mr Reid announced.
The controversial National Identity Register (NIR), which Mr Reid says will cost £5.4bn over 10 years, was originally proposed as a single "clean" computer system.
It was going to be built from scratch to avoid repeating mistakes and duplications in the government's computer systems.
Now the information will be spread across three existing IT systems, including the Department of Work and Pensions' (DWP) Customer Information Service, which holds national insurance records.
Mr Reid denied IT companies had wasted millions on preparation work for an entirely new system, saying the industry had been consulted on the move.
The government has reportedly spent about £35m on IT consultants since the ID cards project began in 2004.
"Doing something sensible is not necessarily a U-turn," Mr Reid told reporters.
"We have decided it is lower risk, more efficient and faster to take the infrastructure that already exists, although the data will be drawn from other sources."
Biometric information will be stored, initially, on systems currently used for asylum seekers, while biographical information will be stored on the DWP's system.
Other information, on the issue and use of ID cards, will be stored on the existing Identity and Passport Service computer system.
Mr Reid also announced proposals to force foreign nationals from outside the European Economic Area (EEA), who are already in the UK, to register their biometrics, such as fingerprints and iris scans.
This is already due to happen for those applying for visas to come to the UK from 2008, but Mr Reid said: "We are going to look at how we could do it for people who are already here."
He said the ultimate aim was to make all foreign nationals from outside the EU to register their biometric details but the scheme would begin with people re-applying to stay in the UK.
He said he also wanted to tighten up exit controls at ports and airports, as well as entry requirements.
"We want to count everybody in and count everybody out," said Mr Reid.
Foreigners from outside the EEA would not be able to get a National Insurance number unless they have a biometric identity.
Immigration Minister Liam Byrne said new legislation would be published in the New Year.
Mr Reid said ID cards would help tackle illegal immigration, identity fraud, fight organised crime and terrorism, help protect vulnerable children by allowing better background checks and improve public services.
They would not stop people having a fake identity, he conceded, but would prevent people having multiple identities, which he said were most often used by "crooks, terrorists and fraudsters".
The plans were laid out in an action plan which Mr Reid said was a "countdown" to the introduction of ID cards.
ID cards are due from 2009, becoming compulsory for anyone applying for a passport from 2010. Critics question their cost and the impact on civil liberties.
The card will contain basic identification information including the name, address, gender, date of birth and photo of the cardholder.
A microchip would also hold biometric information.
Shadow Home Secretary, David Davis, for the Conservatives, said it was "beyond belief" that Mr Reid still planned to "waste up to £20bn of taxpayers' money on this expensive white elephant".
And the decision to use existing databases was "an admission of what will turn out to be a financial disaster for the taxpayer".
He said Mr Reid "has tried to sneak this announcement out in a written statement that is not subject to scrutiny betrays just how fragile the government's confidence in their own scheme actually is".
The government should instead use the money to set up a dedicated UK border police, said Mr Davis.
Nick Clegg, for the Liberal Democrats, said: "These are sticking plaster measures in which the government is cutting corners to make the increasingly unpopular ID card scheme more palatable.
"The fact remains that however much John Reid rearranges the deckchairs, ID cards are doomed to be unacceptably expensive, intrusive and unmanageable."
The SNP called the move an "embarrassing u-turn" which proved the Home Office was "not fit for purpose".
Campaign group No2ID said "mixing up" new data with existing data meant the system would be "even less secure than originally suggested".
The idea that this could then be integrated with banks' chip and pin system, as the Home Office has proposed, was "farcical" in practical terms, a spokesman added.