In 2004 credit cards accounted for almost three quarters (72%) of all online transactions, which meant that 11p in every £1 spent on credit cards was spent on the Web - compared to just 3p in the £1 for debit cards.

But despite this, the research shows that the overall use of credit cards for traditional retail purchases actually fell in 2004, while use of debit cards reached record levels and accounted for almost two thirds (65%) of all plastic purchases.

Sandra Quinn, director of communications at Apacs says shopping online has grown alongside plastic card use but credit cards are far more popular for online payment than debit cards, which is a direct reversal of card use in other retail environments.

"We believe the unique consumer protection afforded by credit cards – such as additional cover for lost or damaged goods – is a key driver in this pattern. Using a separate credit card for online shopping allows you to check your statements and spot any potential fraudulent use more easily," says Quinn.

Apacs says 2004 saw the slowest growth in credit card use for more than a decade – with just four per cent growth in the number of credit cards in issue and only eight per cent growth in spending.

Overall, spending on plastic cards at £273 billion outstripped cash spending (of £272 billion) for the first time ever in 2004 – and this trend is set to continue as the number of payment cards in issue reached a record 141 million.

Looking ahead, Apacs says chip and PIN could be used to make card payments online and by phone more secure by using the PIN in a hand held reader.

The association also predicts further uptake of contactless payments cards - such as the Oyster Card in London - and in pre-paid cards.