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WASHINGTON -- The Department of Homeland Security is rethinking the basic design of an icon of American culture -- the driver license. The effort is evoking concern about privacy, costs and convenience.

Congress prompted the debate by passing the Real ID Act last year to keep driver licenses, the nation's most ubiquitous form of identification, and the lesserused state identity cards out of the hands of illegal immigrants.

State governments have until May 2008 to introduce the new license. But before they do, Homeland Security must set national standards, addressing questions such as what security requirements it will include to prevent fraud and whether merchants should be blocked from collecting digital data stored on the cards.

Officials in Florida, where some of the Sept. 11 hijackers got valid driver licenses, pushing Congress toward Real ID, said their state is ahead of the curve after an overhaul that began soon after the terrorist attacks.

"We created a license that was almost impossible, if not impossible, to counterfeit, to fake, to get," said Frank Penela, spokesman at the Florida Department of Highway Safety and Motor Vehicles. But even Florida's licenses would not meet the standards that Homeland Security is considering.

If Homeland Security follows a list of mandatory security features it recently presented to states, the driver license and state identification cards would rank in sophistication with U.S. passports and the $100 bill.

That means the end of getting a license over the counter at the local DMV in Florida and at least 24 other states, several state officials said.

The federal government first must settle on how the new licenses should be designed to ensure they cannot be forged and that they can be used quickly and frequently to confirm a person's identity.

In the last two decades, the more than 200 million driver licenses in the United States have been transformed from easily faked paper to hard composites overlaid with holograms and fine print. Federal officials want to make it even more resistant to fraud.

Homeland Security favors a highly tamper-resistant material that can support personalized laser etching but is among the most expensive choices available. State DMVs would use a printing process for the background design that is comparable to the Treasury's technique for U.S. currency.

States still could design their own cards, making them even more secure than the federal cards. But at least 25 states that print licenses on the spot could no longer do that because the process would be too intricate, several experts said.

No state now complies with the list of eight minimum security requirements the department is considering.

"We think the floor is being set a little too high," said Molly Ramsdell, homeland security policy analyst for the National Conference of State Legislatures.

Beyond the question of design is how to store data on the cards that can be read by authorities, but not abused by bars, liquor stores or other retailers that routinely check identification cards.

Every new card would contain a digital version of the printed information, such as name, address, identifying features, and possibly a photo. Jonathan Frenkel, director of law enforcement and information sharing policy at Homeland Security, would not say if additional data such as a fingerprint or other biometric is likely to be included.

Many drivers' licenses already have bar codes or magnetic strips that allow data stored on licenses to be read with an automated machine.

Some bars and restaurants scan the bar codes to check age, and in some cases build databases for marketing, but the practice has not been widespread. People on all sides of the debate seem to agree that a standard national format for data could make license scanning routine and probably not limited to beer sales.

According to motor vehicle administrators, current federal and state laws contain few restrictions on the collection and use of data taken from driver licenses during business transactions.

"It's open season on consumers," said Tim Sparapani, a privacy rights lawyer at the American Civil Liberties Union.

The American Association of Motor Vehicle Administrators opposes encryption for the new identification cards because states and law enforcement must share access. But Tom Wolfsohn, senior vice president for government affairs, said other limits should be placed on third parties, such as bars or stores.

The ACLU and other privacy advocates want Homeland Security to require encryption on the new cards.

Some state officials said they are not yet sure what the best approach is.

"The intention is pure, OK?" said George Tatum, the motor vehicles commissioner for North Carolina, which stopped encrypting its license bar codes a year ago to allow access for law officers in other states. "But then, as guardians and custodians of these public records, how can we be sure they don't take this to another level?"

Another question is whether Homeland Security should create a national network of state-maintained databases that agencies, police and possibly businesses could tap for identity verification. States are expected to authenticate documents, such as birth certificates, and determine if an applicant has ID anywhere else.

"Who has access to it and what are the purposes for which it can be used?" Wolfsohn asked of the network. "It goes straight to the heart of privacy rights."

Frenkel said the Homeland Security has not made final decisions on the design or data storage for the new cards.