Post-traumatic stress disorder (PTSD) was found in 26 UK service personnel who served in Iraq or Afghanistan in a three-month period, figures suggest.
Mr Twigg insisted levels of PTSD within the forces was low
Defence minister Derek Twigg told MPs that five troops out of every 1,000 suffered from some mental disorder.
Statistics from the Defence Analytical Service Agency reported one in 3,000 personnel were diagnosed as suffering from PTSD during 2007's second quarter.
The Royal British Legion said the numbers represented a "wider problem".
Director of Welfare Sue Freeth acknowledged there had been improvements in the diagnosis of PTSD within the forces.
But she added: "Research has shown that the culture of the Armed Forces is such that military personnel do not come forward for diagnosis, and may instead use alcohol to cope with their problems."
In addition, the report suggested that there were seven cases of PTSD among troops who had not served in Iraq or Afghanistan and five where records could not identify whether sufferers had visited the conflict zones.
Mr Twigg told the House of Commons that although service personnel deployed to Iraq and Afghanistan were more likely to be assessed with PTSD, the number of diagnoses were "very low."
He added: "We take very seriously the risk of service personnel developing mental illness and attach a high priority to ensuring that individuals have access to the appropriate advice and, if needed, treatment at the right time."