British defence secretary Bob Ainsworth has announced he was bringing forward a review of the controversial compensation scheme for injured servicemen and women.
The government was criticised after it began a court challenge on Tuesday that could cut the payment made to a soldier serving on the front line in Afghanistan.
Mr Ainsworth said recent public debate had demonstrated that the scheme was not fully equipped to deal with "anomalies, legal complexities and wider issues" relating to compensating wounded troops.
"The purpose of the current appeal process was to ensure that our Armed Forces Compensation Scheme remains fair and compensates most those more seriously injured," he said.
"As Defence Secretary I cannot allow the situation to continue that leaves the public in any doubt over my or the government's commitment to our servicemen and women.
"Therefore, in order to deal with this complex issue in the most sensitive, effective and fair way possible, I have ordered the planned review of the compensation scheme to be brought forward from next year."
The review of the compensation scheme begins immediately and will involve consultation with legal experts, service charities and troops and their families.
The Court of Appeal case brought by the Ministry of Defence focuses on the levels of payment made to Corporal Anthony Duncan, who is on active service in Helmand Province, and Royal Marine Matthew McWilliams.
Cpl Duncan, of the Light Dragoons, who was shot while on patrol in Iraq in 2005, was originally awarded £9,250, which was increased to £46,000 by a Pensions Appeal Tribunal.
The £8,250 award made to Mne McWilliams, who fractured his thigh in a training exercise, went up to £28,750 on appeal.
Derek Sweeting QC told the court yesterday that the Ministry of Defence had argued the purpose of the compensation scheme was to focus on the original injury and not subsequent treatment or complications caused by the injury. This would be "grossly unfair" because it would mean that the effect on the individual was ignored, he said.
The court's ruling in the case is not expected to be handed down before October.
Mr Ainsworth said the current compensation scheme was already "much fairer" than its predecessor, noting that the lump sum payments for the most serious injuries were doubled to £570,000 last year.
"I recognise that the changing requirements of our people mean that we cannot stand still," he said.
"The world-class medical care that we provide on operations means that more people are surviving very serious injuries than before.
"We need to ensure that the scheme is responsive enough to meet their needs."
The Defence Secretary pledged that the new arrangements would benefit troops with claims under the existing scheme, including Cpl Duncan and Mne McWilliams.