Cpl Anthony Duncan was initially awarded £9,250 after being shot, while Marine Matthew McWilliams received £8,250 for fracturing his thigh on a training exercise.
Appealing to a tribunal to have those sums increased, both men argued they had suffered a number of subsequent health problems during their treatment and that these should not be regarded as separate from their original injuries.
Three judges agreed with them and increased their compensation, but the MoD is now seeking to overturn that ruling.
It claims it is trying "to clarify an earlier judgment about how the armed forces compensation scheme is administered, and to protect the key principle of the scheme: the most compensation for the most seriously injured".
Simon Weston, who suffered horrific burns in the Falklands conflict, told BBC Radio 4's Today programme the compensation system was "incredibly flawed".
A lot of service personnel with the worst injuries "will never work again or will always have problems", he said.
"What we need to understand is that this large sum of money is not so they can go on jollies and go on holidays and buy nice flash cars.
They don't understand how people feel about our troops, says Diane Dernie
"This means that they're buying a home, they will be subsidising their own care because they won't be given a huge amount by the state.
"These guys are using that money to live not to exist. It seems petty to be revising the small amount of money."
But armed forces minister Bill Rammell said the nub of the case was about the government rightly trying to protect the principle of giving the most compensation to the most seriously injured.
Speaking from Afghanistan, he told BBC Radio Scotland: "If what the Ministry of Defence and the government was trying to do was to absolve ourselves of our responsibility, we wouldn't have doubled the compensation levels for the most seriously injured last year.
"We wouldn't have made it easier for service personnel once they leave the armed forces to get training, we wouldn't have given them better access to housing, and better access to healthcare."
The MoD is conducting a review of the compensation scheme following a number of appeals from, or on behalf of, former servicemen.
'Skimping and saving'
One of the most high-profile came from Diane Dernie, the mother of Lance Bombardier Ben Parkinson, who lost both legs and suffered severe brain damage in Afghanistan.
Initially he received £152,000, but following widespread criticism that was increased.
The MoD points out that it has doubled the maximum lump sum payment to £570,000 for the most severely injured soldiers, in addition to an index-linked monthly income for life.
But the chairman of the Commons select defence committee, the Conservative MP James Arbuthnot, warned against "skimping and saving" on compensation for the armed forces.
"If the Ministry of Defence is appealing to keep the costs of looking after injured servicemen as low as possible, then it sends all the wrong messages to people who are wondering whether to join the armed forces, wondering whether to put themselves on the line, for principles that we are asking them to pursue," he said.
This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.