Des Browne, the Secretary of State for Defence, imposed the ban on further media deals pending a full-scale review of rules governing payment - although it did not affect Leading Seaman Faye Turney's ITV1 interview with Sir Trevor McDonald, aired last night. He said the Royal Navy had faced a "tough call" but admitted that the decision to allow the captives to sell their stories had "not reached a satisfactory outcome".

Mr Browne intervened last night amid a chorus of criticism from senior political and military figures and families of soldiers killed in action.

Graphic accounts of the drama by two marines, Leading Seaman Turney and Arthur Batchelor, appeared in The Sun and the Daily Mirror yesterday, sparking claims that the move could set a potentially dangerous precedent.

Leading Seaman Turney told The Sun she feared she was being measured for her coffin and was asked how she felt about "dying for her government". She told the newspaper she was forced to strip to her underwear in a cell and was told she would spend "several years" in jail if she did not write a letter home and confess to being in Iranian waters.

Operator Mechanic Batchelor, 20, told the Daily Mirror he "cried like a baby" in his cell. He said: "It was beyond terrifying. They seemed to take particular pleasure in mocking me for being young. A guard kept flicking my neck with his index finger and thumb. I was frozen in terror and just stared into the darkness of my blindfold."

One of the captives, Lt Felix Carman, said he found selling the story "a little unsavoury".

Gerald Howarth, the Tory defence spokesman, said the episode was "tacky and extremely uncomfortable". Lord Heseltine, the former Conservative defence secretary, said: "What an extraordinary story that people who every day take calculated risks with their lives are expected to earn relatively small sums of money while people who get themselves taken hostage, in circumstances which are worth exploring, can make a killing. I have never heard anything so appalling."

Nick Harvey, the Liberal Democrat defence spokesman, said he would try to question Mr Browne about the affair when Parliament returns next week. "This belated review of procedures is essentially an admission that the whole affair has been mishandled," he said.

Meanwhile, reports emerged of a split within the armed forces. Maj-Gen Patrick Cordingly, who commanded the Desert Rats during the 1991 Gulf War, said he was depressed that personnel had been used "almost as a propaganda tool" and said army personnel had been ordered not to sell stories to the media. Friends in the forces told him that Sir Richard Dannatt, the chief of the general staff, had ruled out any similar moves, he said.

Mr Browne said last night: "The dilemma facing the Navy was this: should they refuse to give them permission to accept payment, recognising that some of them would find ways to tell their experiences anyway, without the support and advice of their service, and therefore with greater risk to themselves and crucially also at risk to operational security? Or should the Navy accept that, in this particular and exceptional case, and in the modern media environment, they should give permission for these young people to tell their story precisely in order to stay close to them but accepting the consequence of the potential payment involved?"

Yesterday the Second Sea Lord, Vice-Admiral Adrian Johns, told the BBC the rules were the product of an earlier age. He said: "Quite frankly, they were probably written at a time when a fee meant a fairly modest fee for giving some information to a journalist or newspaper."