Soldiers are being paid a "bounty" of £1,300 to persuade friends to join the Army because officers believe the conflict in Iraq is making parents turn their children away from the forces.
Members of Infantry and Royal Artillery regiments are being offered the payments from this month to turn round a recruitment shortfall that has left the Army 2,000 soldiers below strength.
But MPs warned that the scheme showed that the Army was over-stretched and warned that high-profile operations in Iraq and Afghanistan were putting recruits off serving.
Rose Gentle, whose 19-year-old son, Gordon, was killed in Basra a month after completing his training, condemned the payments as "blood money".
Mrs Gentle, who has been visiting schools in Glasgow to persuade young people not to sign up, said: "It's disgusting. It's blood money.
"What happens if a young boy gets his friend to sign up to go to Iraq and he gets killed. He will have to live with that for the rest of his life."
Bounties worth £650 were introduced last autumn to combat a "recruiting shortfall" the Ministry of Defence said. The scheme produced 110 recruits, so senior officers decided to rerun the scheme this summer, starting this month, doubling the bounty to £1,300 for each recruit who passes basic training.
Senior officers have said the high-profile casualties of the war in Iraq and the dangers of military operations in Afghanistan have hit recruitment. They warned that the conflicts fuelled fears among parents - known as "gatekeepers" by Army recruiters - about their sons and daughters signing up.
The launch of the bounty scheme comes after British forces suffered their worst month's casualties in Iraq since the war ended, with 11 Britons killed. The Independent on Sunday revealed this week that dozens of women whose sons, husbands and daughters are serving in Iraq have joined a campaign for British forces to be withdrawn.
The Army and the Royal Artillery were well below their targets for new recruits last year. There were 2,110 new infantry recruits last year, well below the target of 2,830. The Artillery attracted 580 recruits, despite a target to sign 800 new soldiers.
Latest figures show the Army remains below strength, despite a steady reduction in the planned size of the forces in recent years. There were 88,450 in the Army's other ranks, nearly 2,000 down on full strength, although the officer corps was up on its planned numbers.
A spokesman for the Ministry of Defence said recruitment was more difficult in times of economic prosperity. He said: "It is particularly helpful for Army recruitment because it takes a soldier to recruit a soldier."
Mark Harper, the shadow Defence Minister said: "This desperate measure illustrates the chronic recruitment problems the Army faces due to the current overstretch of our armed forces.
"With gaps between tours of duty at an all-time low, recruitment and retention rates are bound to be affected by the Government's policy of taking part in an ever-increasing number of operations with an ever-decreasing standing Army."