The laptop was stolen from the car of a Royal Navy officer who left it unattended overnight in the Birmingham area.
Secretary of Defence Des Browne admitted there were weaknesses in MoD security procedures to protect databases as well as in personnel security training.
According to the Telegraph:
[T]he stolen device did not even have the encryption installed, which Mr Browne said was "a breach of MOD security regulations".
It contained details on 600,000 people who had expressed an interest in the Armed Forces.
While some entries were just a name, terrorists might have gained access to 153,000 people's personal data such as National Insurance numbers, drivers' licence details, family details, doctors' addresses and National Health Service numbers.
Another 3,700 people also had banking details in records that stretched as far back as 1997.
The paper also reports fears have been raised that personal information on the laptop may include the recruit's religious affiliation. If terrorists did indeed steal the laptop, they may use it to hunt down Muslim recruits and execute them. This scenario has been stoked by the plot last year to kidnap a British Muslim soldier and behead him.