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Definition from the Home Office
"Identity theft occurs when your personal information is used by someone else without your knowledge. It may support criminal activity, which could involve fraud or deception."
Note that it does not necessarily target financial details - password details to blogs or website may be taken and used, this is still identity theft and may be turned to a malicious purpose.
How to combat identity theft
Don't give away passwords, or use obvious passwords.
Keep your passwords safe and never record or store them in a manner which leaves them open to theft, such as in your purse or wallet.
Don't leave personal information available publically on websites or social networking sites.
Take care when moving house that mail is re-directed.
Don't throw away entire bills, receipts, credit-or debit-card slips, bank statements or even unwanted post in your name. Destroy unwanted documents, preferably by using a shredder.
Don't give away banking details to anyone - even if they appear to be from a bank!