By Angus Crawford
Mr Smith suffers from panic attacks and depression
Injured veterans are being refused benefits and are ending up living in poverty because of a loophole in benefit rules, the BBC has learned.
Some veterans who get a pension for their disabilities are being refused income support.
The Royal British Legion believes the issue may affect 60,000 men and women.
The Department for Work and Pensions says the war pension payments have to be taken into account when benefits are being assessed.
Mark Smith, 36, a veteran of the Coldstream Guards, served as a peacekeeper in Bosnia.
There he saw what he called "the disgusting side of life, the disgusting side of war".
"I have nightmares, it leaves me tired, angry and confused."
The nightmares, panic attacks and depression began later, he said.
Mr Smith was diagnosed with post traumatic stress disorder and assessed as 40% disabled.
He was awarded a war pension of £58.04 per week as compensation for his injury.
But when he applied for income support he was told he was already getting too much money.
He said: "Compensation you're entitled to is taken away from you, that's no justice.
"That's no way to treat people who fought for their country."
A letter he received this year states he is entitled to £2,633 arrears for his war pension, but while waiting for the award he got income support.
This was deducted and he actually received £20.10.
Mr Smith said: "It kind of takes away from you everything I'd always believed in.
"I look at my country and I'd do anything for my country, But my country doesn't think I'm worthy."
The Royal British Legion has said the situation is a problem.
Lisa Wise, head of public policy said: "On a day to day level they're surviving on the absolute minimum."
She says veterans feel betrayed. "The government doesn't really care, what they're being paid for is a benefit like any other citizen.
"Not someone who's fought and been injured for their country."
She explains that the MoD views the war pension as compensation for injury, but the Department for Work and Pensions treats all but the first £10 as income.
This money is then taken into account when assessing benefits like income support and veterans are treated like civilians who suffer accidents at work.
Ms Wise said this problem could affect those who have served in Afghanistan and Iraq in future.
"New veterans will face exactly the same problem and perhaps be at even more of a disadvantage."
A spokesman for the DWP said: "The War Disablement Pension rightly provides a regular income to ex-servicemen and women who have become disabled through service in the armed forces.
"Of course this income has to be taken into account when assessing entitlement to other income-related benefits.
"However, there remains a range of additional financial help available to all disabled people."