Lloyds TSB in the UK is to pilot a key-fob based security scheme with 30,000 of its online banking customers in an attempt to crack down on phishing and other fraud attacks.

The device generates a unique, one time only, six digit number that customers enter when they log-on to the Internet banking site.

Customers taking part in the trial will log-on to Lloyds TSB Internet banking as normal using their User ID and Password, but instead of entering their Memorable Information they will be asked to press the button on the Access Code Device to generate a unique code. The customer then types in this code, which the bank verifies.

Customers taking part in the trial will also be asked to use the Access Code Device to generate a new code to authorise some online transactions such as bill payments instead of their normal password.

Commenting on the trial, Matthew Timms, Internet banking director, said: “Fraudsters are becoming increasingly cunning with their tactics, and there's no hiding the fact that fraud is on the increase. The trial of the Access Code Device is one of a number of security initiatives we are introducing to address the concerns of customers and stay ahead in the battle against online fraudsters”.

As part of this initiative, Lloyds TSB is also offering its customers: a free PC security scan which will identify any potentially suspicious spyware, 20% discount on Zone Labs security software: ZoneAlarm Security Suite.

"This is the first large-scale pilot of its kind in the UK. Online is becoming an increasingly important area for customers and maintaining confidence in such an important channel is critical" said Timms.

The Vasco tokens cost between £2 and £5 but Timms would not give the total cost of the trial.

Last year UK banks lost £12m to internet banking related fraud - small compared to £500m in credit card fraud but Timms said the idea is to develop a system that can squash both problems.