Mr Straw - a former home secretary - and the Treasury have written to cabinet colleagues condemning the plans drawn up by home secretary David Blunkett. Both letters were sent a few days before prime minister Tony Blair backed the ID scheme in his speech to the party conference in Bournemouth.
Under Mr Blunkett's plans for ID or 'entitlement cards' - which would be required to claim state benefits or use public services - British residents would not have to carry the card at all times, but would have to produce it within a few days if requested.
In a six-page attack on the scheme, Mr Straw says the plans are 'flawed' and warns:'The potential for a large-scale debacle which harms the government is great'.
A five-page letter from the Treasury hints at a huge political backlash because it would have to be treated as a tax rise at a time when the government is sensitive on the issue.
It is now unlikely the scheme will make it into the Queen's Speech, with Mr Blunkett acknowledging that he will have to shelve the plan unless he can overturn opposition in the Cabinet.
In his confidential letter, Mr Straw reveals the Foreign Office has begun its own study of ID cards in other countries and he goes on to raise numerous potential 'pitfalls', including:
* The likely loss of £33m from the Foreign Office in passport fees as people use their ID cards instead to travel to the EU;
* Potential loopholes for illegal economic migrants to exploit;
* The extra costs of having to include biometric data on passports and visas as well as ID cards;
* 'Unnecessary spats' with t he European courts because of difficulties of making them compatible with other countries;
* The need for the Irish government to introduce an ID card because of cross-border travel and the one million Irish who live in Britain;
* Special arrangements to preserve the rights to services and benefits of the 15 million Britons living overseas.