Confidential medical information from sick and disabled people applying for welfare benefits is opened and sorted by Royal Mail staff on behalf of the Government without the claimant's knowledge or consent, The Independent can reveal.

Medical experts reacted angrily to the potential for breaches in confidentiality after it emerged that the Department of Work and Pensions (DWP) routinely uses Royal Mail to process the thousands of benefits claims, including health data, it receives every day.

The revelations have prompted fresh concerns about the fact that the handling of sensitive personal information can be legally outsourced without the subject's consent.

For example, people applying for sickness benefits such as employment support allowance (ESA) must first complete a detailed medical questionnaire explaining their conditions, prescribed medication and therapies, and the names and addresses of their doctors and nurses.

The form, which also includes highly sensitive questions about addictions and mental illness, is then posted in a pre-addressed envelope to the DWP or Atos Healthcare – the Paralympics sponsor paid by the Government to carry out controversial assessments of claimants' capacity to work.

However, it has emerged that these envelopes are routinely opened and the contents sorted by the Royal Mail, unless the envelope is specifically marked "private and confidential". In those cases they are sent to Atos unopened, according to the DWP.

The information came to light after Lynne Neagle, a Welsh Assembly member, was asked to investigate by a constituent who was told by a local post office not to bother sending ESA forms by special delivery as the envelope would be opened by Royal Mail regardless.

Former RAF man John Williams, 50, from Pontypool in south Wales, received incapacity benefit (the precursor to ESA) for 10 years, because he was unable to work as a result of arthritis and post-traumatic stress disorder. He was recently declared fit for work – which means that his benefit will stop after 12 months whether he has a job or not – and was posting his appeal documents when told about Royal Mail's role. "Nowhere in any of the paperwork does it say that a third party is involved," he said. "People are sending very personal information and have a right to know this is happening; I feel like I've been misled."

Ms Neagle said: "These claimants often have incredibly complex case histories – they may have mental health problems or be victims of sexual abuse – I imagine they'd find it incredibly unsettling to know that such deeply personal information was being treated like this.

"While I have no reason to doubt the absolute integrity of the Royal Mail staff involved, that's not the point – they simply should not have access to this kind of information."

The DWP said security measures were in place to minimise the risk of any data breaches, including CCTV in sorting rooms and procedures that mean at least two people open the mail together.

"We are a large organisation that handles all kinds of sensitive information. We use Royal Mail to sort and direct our mail to the appropriate processing centre," a spokesman said. "We hold the contract and ensure they abide by the same data protection and security checks as any DWP employee."

Dr Tony Calland, chair of the British Medical Association ethics committee, said the security was irrelevant: "We are very concerned that a government department could even contemplate allowing such sensitive and confidential medical data to be handled by a third party without the person's consent."