The Army has apologised after 38 of its most experienced soldiers received emails telling them that they were being sacked.
Downing Street described the treatment of the men - including a Royal Tank Regiment veteran serving in Afghanistan - as "completely unacceptable" while Defence Secretary Liam Fox demanded to know how it had been allowed to happen.
Dr Fox - who said he was "furious" at the incident - was summoned to House of Commons to make an emergency statement explaining what had gone wrong.
"This is a completely unacceptable way to treat anyone, not least our armed forces," Dr Fox told MPs.
"The correct procedure was not followed. I regret this and want to reiterate the unreserved apology already made by the Army and on behalf of the Ministry of Defence.
"Arrangements have already been put in place to make sure that this does not happen again. The Army are already investigating the particular circumstances."
The Sun newspaper disclosed that the men had received the email - headed "Start planning your resettlement" - informing them that they were being made redundant as part of the Government's defence cuts.
The disclosure came the day after The Daily Telegraph reported that a quarter of the RAF's 400 trainee pilots - some within just a few flying hours of qualifying - were being sacked as part of the cuts.
Shadow defence secretary Jim Murphy said a pattern was developing as a result of the Government's "rapid" spending cuts that was leading to mistakes being made.
Athol Hendry, of the Soldiers, Sailors, Airmen and Families Association charity, said: "The demands placed on our servicemen and women and their families are different to anything experienced by others. We must never lose sight of this if morale and trust are to be maintained."
