The growth of web-based identity theft has helped push UK fraud levels to their highest in 12 years, according to research from KPMG.

More than £1bn worth of fraud reached British courts last year, the highest figure since 1995 and the second highest in the 20-year history of the consultancy's Fraud Barometer report.

The total number of cases in 2007 fell to 197, down 29 per cent. But the figure is still higher than that for any year prior to 2005.

Roughly 90 per cent - or £889m-worth - of UK fraud is committed by organised gangs. And favourtie methods are VAT scams, ID thefts and other forms of white-collar crime.

Fallout from the US credit crunch could cause even more problems, according to KPMG Forensic partner Hitesh Patel.

"Last year saw a respite in prosecutions for frauds against banks and other corporates, but now that the economy looks set to slow, we could see more people attempting frauds to ease their financial burdens," said Patel.

"As companies tighten their belts in the harsher conditions and take a closer look at their operations and related expenditure, it is highly possible that a greater number of frauds may be detected."