The warning is contained in a memo sent to city centre businesses by the Westminster Crime and Disorder Reduction Team. It calls for extra vigilance by consumers when using external cash machines at any venue, including banks, supermarkets and petrol stations.

"We are aware of a growing new trend to affix external card readers over the normal card entry," says the Council circular. "This is aggravated by the PIN number also being obtained by 'shoulder-surfing' or possibly other remote means."

The Council says that most incidents have taken place in North London but it expects the method to be quickly deployed in the heart of the capital if successful. The council urges consumers to alert their bank and the police if they encounter any suspicious devices when attempting to make a transaction.

ATM fraud involving lost, stolen and counterfeit cards cost the UK banking industry £29.1 million in 2002, an increase of 37% on 2001's figure, according to figures from Apacs.

Banks operating in the United Arab Emirates recently lowered limits on ATM withdrawals after a card skimming gang escaped with a $437,000 cash haul using cards and PINs stolen by devices attached to six cash machines in the region.

News of the latest outbreak comes as predictive analytics vendor SPSS releases results from a survey of 1000 adults which finds that the majority of consumers (54%) feel that banks and building societies aren't doing enough to protect them from credit and debit card fraud. This is despite the fact that only seven per cent of respondents have ever been victims of ATM/credit card fraud.

Only 16% of those questioned said that they thought the police has chief responsibility for preventing fraud.

"It's absolutely imperative for financial institutions to put fraud prevention at the top of their priority list, as consumers are clearly watching them like hawks," says Martyn Reeves, UK country manager at SPSS. "If UK citizens believe banks are responsible for protecting their money, then any fraudulent activity is going to irreparably damage these institutions' brands."