Maurice Chittenden and Sarah Baxter in Washington
MoD officials claimed that the move to lift the ban on military personnel selling their stories while in service was justified because of the exceptional circumstances of the case. The hostages are expected to earn as much as £250,000 between them.
The story of Faye Turney, 26, the only female among them, is expected to be the most lucrative. She could profit by as much as £150,000 from a joint deal with a newspaper and ITV.
The MoD bracketed the hostages 13-day captivity in Iran including appearances on state television by some to admit straying into Iranian waters with winners of the Victoria Cross.
This weekend relatives of victims killed or injured in the Iraq war and opposition politicians criticised the authorisation as inappropriate and undignified. It comes only three days after their release and before they have given detailed evidence to an official inquiry.
Liam Fox, the shadow defence secretary, said: One of the great things about our armed forces is their professionalism and dignity. Many people who shared the anxiety of the hostages abduction will feel that selling their stories is somewhat undignified and falls below the very high standards we have come to expect from our servicemen and women.
Rose Gentle, whose son Gordon Gentle was killed by a roadside bomb in Basra in Iraq, said the MoD should not allow the servicemen to sell their stories. This is wrong and I dont think it should be allowed by the MoD. None of the parents who have lost loved ones in Iraq have sold their stories, she said.
Critics claimed it had become a media circus, with one former British commander saying the released hostages were behaving like reality TV contestants. Others said they were being used as pawns in the propaganda war with Iran. But some former soldiers said it was a shrewd move by the MoD to control publication of the captives stories.
The storm over the money came as it emerged that the White House had intervened to boost the British captives chances of release despite official denials of a deal.
The Royal Marines have agreed to pool their fees from newspapers to share out equally between those who were held captive and to give 10% to their service benevolent fund. The Royal Navy personnel are likely to be allowed to keep their money individually.
Yesterday some of the freed prisoners were being minded by liaison officers who allowed photographs of their families but said that the servicemen could not appear because they had signed deals with particular media organisations.
The MoD said: Serving personnel are not allowed to enter into financial arrangements with media organisations. However, in exceptional circumstances such as the awarding of a Victoria Cross or events such as those in recent days permission can be granted by the commanding officer and the MoD.
The only recent precedent was the decision to allow Johnson Beharry, 27, the first black VC, to sign a deal to write his autobiography.
Some of the sums being offered to the captives are higher than the money paid to service personnel maimed in Iraq or Afghanistan. The standard tariff for the loss of an arm is £57,500.
One of the hostages, Dean Harris, 30, an acting sergeant in the Royal Marines, told a Sunday Times reporter yesterday: I want £70,000. That is based on what the others have told me they have been offered. I know Faye has been offered a heck more than that. I am worth it because I was one of only two who didnt crack.
John Tindell, the father of Joe Tindell, another of the hostages, said his son had turned down an offer of £10,000. The MoD said if you want to earn money you are free to go out and do it. I was a bit surprised. The MoD said to the marines, Go out there, tell the truth and make the money.
He claimed the marines were planning to sell on eBay the vases given to them in their goody bags by the Iranians.
The freedom they were given surprised Max Clifford, the storybroker, who said the MoD was frogmarching them out to win the propaganda war.
Colonel Bob Stewart, a commander of British UN forces in Bosnia, said: I am appalled the MoD is encouraging them to profit from a military disaster. Some of them are acting like reality TV stars.
Flight Lieutenant John Nichol, the RAF navigator tortured by the Iraqis after being taken prisoner in the first Gulf war, was told by the MoD not to talk to anyone about his experience but was allowed to write a censored book a year later while still in the service.
If they can get this story out in a controlled manner I have no problem with that, he said. No one complains if a general writes his memoirs. But there is a snobbery about a junior rank telling their story.
Andy McNab, the former SAS sergeant who left the service a year before his Bravo Two Zero, said: The MoD understands that the story will come out eventually. By giving permission to sell their stories, the MoD has an element of control of what comes out.
The White House involvement in the hostages release has been confirmed. When the crisis broke, the US and Iraqi governments offered to help. Several initiatives were under way before the release, allowing officials to say that developments were coincidental.
First came the release last Tuesday of Jalal Sharafi, an Iranian diplomat missing in Iraq since February. A US administration source said he had been in a joint Iraqi and American facility, though this was denied by a British source.
On Wednesday the Red Cross was granted access to five Iranians who were detained by US forces in January in Iraq. Irans President Mah-moud Ahmadinejad announced the same day that the British captives could go home.
Hoshyar Zebari, the Iraqi foreign minister, said yesterday that he was pressing the Americans to release the five Iranian detainees, or at least to transfer them to Iraqi custody.
