Ministers have admitted they handed over terror suspects in Iraq to US authorities, sparking claims of collusion in extraordinary rendition.
Defence secretary John Hutton said two men detained in 2004 were transferred to US custody and were then transported to Afghanistan, where they remain.
He said he was reassured they had been treated humanely but apologised for past incorrect answers given to MPs.
The Tories said the UK faced charges of being "complicit with serious abuse".
The Lib Dems said Mr Hutton's comments raised "as many questions as answers" and called for all relevant documents in the case to be published.
Mr Hutton said that contrary to previous statements he now knew UK officials were aware that the two men, understood to be Pakistani nationals, had been transferred to US custody in 2004 but that no action had been taken on the issue.
He said "brief references" to the case had been included in papers sent to then Foreign Secretary Jack Straw and Home Secretary Charles Clarke in April 2006 but its significance had not been highlighted at the time.
The UK has always denied allegations of collusion in extraordinary rendition - the term used for sending terror suspects for interrogation in countries where torture is not illegal - despite frequent claims to the contrary.
In a statement to MPs, Mr Hutton said a review of detainees held by the UK forces in Iraq and Afghanistan since 2003 had uncovered the case of the two men, members of the banned group Lashkar e Tayyiba, which has links to al-Qaeda.
I regret that it is now clear that inaccurate information has been given to the House by my department
They are still being held in Afghanistan, where they are classified as "unlawful enemy combatants".
Mr Hutton said there was no "substantiated evidence" that they had been mistreated or subjected to abuse there.
But he added: "I regret that it is now clear that inaccurate information on this particular issue has been given to the House by my department.
"I must stress that this was based on the information available to ministers and those who were briefing them at the time.
"My predecessors as defence secretary have confirmed to me that they had no knowledge of these events."
The Conservatives said that although the case was a "specific rather than a systemic failure", it raised serious questions about the practice of extraordinary rendition.
Shadow security minister Crispin Blunt said Mr Hutton's remarks seemed to contradict assurances given in 2006 and ministers were wrong to "overlook" the importance of the case.
"It is of serious concern that there is a underlying charge of complicity with serious abuse of people detained by British forces on operations overseas," he said.
It is of serious concern that there is a underlying charge of complicity with serious abuse of people detained by British forces on operations overseas
Crispin Blunt Shadow security minister
Former shadow home secretary David Davis said the case was the "latest in a series of issues where the government has been less than straightforward" in regard to allegations of torture.
For the Lib Dems, security spokesman Nick Harvey asked the defence secretary to state categorically that UK forces were explicitly told not to be complicit in "abduction, rendition or torture".
"I would like you to tell this House that you are absolutely confident that nothing will come to light subsequently which might cause you or any other minister in the future to have to come to the despatch box and acknowledge that we haven't had as comprehensive a version of the truth today as you might like to think," he said.
Former Lib Dem leader Sir Menzies Cambell pressed ministers on whether the UK had sought assurances that the two men would not be tortured before they were handed over.
Civil liberties campaigners said they were "shocked but not surprised" by Mr Hutton's statement.
"This was rendition," said Liberty director Shami Chakrabarti.
"It was transfer of prisoners of a kind which had previously been denied."
The government admitted last year that two US flights carrying terror suspects for interrogation landed on UK territory in 2002, contradicting previous ministerial statements on the matter.
Foreign secretary David Miliband said the planes had refuelled on the UK dependent territory of Diego Garcia.
The suspects in question were detained in Iraq by UK forces in 2004
He said he was "very sorry" previous denials about rendition flights by among others, former prime minister Tony Blair, had been wrong but said they were made in good faith at the time.
In December 2005, Tony Blair told MPs the practice of rendition - moving suspects from one country to another - had been US policy for "many years".
He added: "It is not something that I have ever actually come across until this whole thing has blown up (the row at the time about whether US extraordinary rendition planes had passed through the UK) and I don't know anything about it, and the reason why I am not going to start ordering inquiries is that I can't see a reason for doing it, I am afraid."
The latest revelation comes days after Binyam Mohamed, the former Guantanamo detainee who claims UK intelligence agencies colluded in his torture, returned to the UK.
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