The government has been accused of harming the Royal Navy's reputation by allowing sailors to sell stories of their 13-day ordeal in Iran.
Faye Turney has reportedly struck a deal worth more than £100,000
Shadow defence secretary Liam Fox said the decision had done "a great deal of damage" and urged ministers to "come clean" over the decision.
Downing St has refused to say when Tony Blair knew, but any further media sales have been banned pending a review.
The Lib Dems said events had been "mishandled" and the ban came too late.
The government made their U-turn late on Monday, reversing an earlier decision to allow service personnel to sell their stories.
Arthur Batchelor, 20, the youngest of the British sailors to be held captive, told the Daily Mirror about his "nightmare" at the hands of his captors.
And Leading Seaman Faye Turney sold her story to ITV1's Tonight with Trevor Macdonald and the Sun newspaper - reportedly for a six-figure sum, some of which will go to navy families.
Defence Secretary Des Browne, who was made aware of the Navy's intention to allow the stories to be sold, imposed the ban on more sales on Monday, after admitting the outcome had not been "satisfactory" and saying that lessons needed to be learned.
An MoD review of the rules governing the issue was under way, aimed at making the regulations consistent across the armed forces, he added.
Dr Fox, who has said the crew were effectively "put up for auction" after their return last week, described the original decision as "complete ministerial incompetence".
"The MoD's actions were completely at odds with normal procedure and totally out of character with the ethos of our armed forces," he said.
"Des Browne needs to come clean with the details of who was involved in the decision, at what stage and why it was taken."
He later told the BBC that the whole episode had done "a great deal of damage" to the dignity of the armed forces and the Ministry of Defence was guilty of "a failure of leadership".
On Tuesday, a Downing Street spokeswoman refused to be drawn on when the prime minister became aware of the decision.
She said: "This was a decision taken by the navy... I don't think it's helpful to get into who informed who when. The prime minister supports the defence secretary in the decision taken to look at this."
But Labour former defence minister Peter Kilfoyle said the armed forces had been left a "laughing stock" because of the way it had been handled.
And Liberal Democrat spokesman Nick Harvey said the ban came too late and was an admission that the MoD had "completely mishandled the situation".
He also warned the government against using the ban as an excuse to gag personnel from helpful discourse with the media in the future.
In the Trevor Macdonald programme, Leading Seaman Turney defended her decision to sell her story and said a percentage of the money would help the crew and families of HMS Cornwall.
"I want everyone out there to know my story from my side, see what I went through," she told the programme.
The Royal Navy crew were on patrol boats in the Gulf on 23 March when they were detained by Iran's Revolutionary Guard.
The Iranians accused the crew of straying into its waters - the British say they were in Iraqi territory.