Fifteen thousand British troops are to be given a tax-free flat-rate bonus of £2,240 for serving six months on the front line in Iraq, Afghanistan and the Balkans.
Gordon Brown approved the award yesterday. It will cost the Treasury £60m.
However, Des Browne, the Defence Secretary, rejected demands by soldiers' groups backed by the Conservative leader, David Cameron, for forces on the front line to be exempt from tax. That would mean higher paid officers will lose out on big bonuses.
Ministry of Defence officials said the bonus is deliberately being paid as a flat-rate sum to give more proportionately to privates on low pay.
Defence officials said cutting tax would have given about £10,000 to senior officers but a few hundred pounds to privates. "This way is fairer," one MoD official said.
The bonuses will be backdated to April this year to pay thousands of troops including the 3rd Battalion the Parachute Brigade (3 Para) and 16 Air Assault Brigade, who have returned from the front line.
The money will be paid to all ranks, regardless of their tasks, from filing clerks to front-line soldiers. "It is not danger money," the official insisted yesterday.
* A British security worker, named as Richard Sedgley, 32, of Wolverhampton, has been killed in a roadside bomb in Iraq. A spokesman for his employers, the Olive Group, was unable last night to confirm details of his death, other than that Mr Sedgley had been killed while working on reconstruction work on Sunday.Reuse content