Basic military pay after tax across Europe and in the United States looks remarkably similar to the salaries paid to British troops. None of the wages paid appears over-generous.

However, the small print of the financial deals offered to combat troops makes the difference. The US military have the best arrangement. When US troops are deployed overseas to fight, their salaries are tax-free.

British troops serving in Iraq and Afghanistan have looked enviously at their American counterparts. The only way in which the Ministry of Defence has been able to try to match the Pentagon's generosity has been to ask the Treasury to fund tax-free operational bonuses, which are now paid to all Service personnel who complete six-month tours.

Throughout Europe, taking into account the different standards of living, the British military pay compares favourably with allies. France, Germany, Italy, Spain, the Netherlands all pay relatively low wages for the most junior ranks, but offer extra allowances to boost their pay packets. German troops are offered a Christmas bonus. The Spanish, like the British, offer their troops special geographical allowances when they are deployed away from home. Spain has troops serving in western Afghanistan.

The most attractive wages appear to be paid to Australian troops. The basic pay for new soldiers is A$38,000 (£18,619), but they receive an additional annual A$10,000 to compensate for inconveniences such as working at weekends. Their annual A$48,000 is worth £23,515.

Charles Heyman, the editor of The British Army Guide, said: “The impression is that the Americans get more allowances than our boys, as well as the tax-free salary when serving in war zones. They also get special treatment when they leave the Services from the Department of Veterans Affairs.”

He added: “But no one who joins the Armed Forces in any country expects to be paid like lawyers or doctors. They join because they are interested in a varied career and a lot of them serve for only short periods. They see joining the military as an entry into adult life and many of them leave after three or four years. But if a government wants to retain these people, especially the middle-ranking officers and NCOs, they are going to have to pay them.”

General Sir Richard Dannatt, the Chief of the General Staff, said in his interview with The Sun: “I regard what we are doing in Iraq and Afghanistan and elsewhere as non-discretionary — [in other words] we have got to do those things. To make sure that we have Armed Forces — in my case an army — populated by motivated and well-trained people, we have got to look after their individual needs well enough.”

The Ministry of Defence is working on a White Paper that is aimed at drawing together all government departments to make sure that serving Armed Forces personnel and those who retire because of injuries suffered in Iraq and Afghanistan are properly cared for when they need housing, social benefits and medical treatment in the NHS. It is due to be published in a few months.

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