Driving licences can be used as an identity document for verification of identity (photo) and address.
Rules for UK and Northern Ireland licences are fairly simple - they need to be valid (ie still in date) and the address must still be current. If it's an old address on the licence this invalidates the document.
For overseas licences it gets a lot more complicated and it's best to check the current advice that is available on the UK government web-site here. If you can't use the licence to drive in the UK this means it is not a valid document for the purposes of an identity check.
One welcome change is that from 8th June DVLA stopped issuing the paper counterpart documents that go with the UK photo driving licence. As a result the paper counterparts no longer have any validity and are not required as part of an identity check. Trac has been updated to reflect these this change.