The Royal Welch Fusiliers and the Royal Regiment of Wales will combine under the government's shake up of the Army.
The Fusiliers are to merge with the Royal Regiment of Wales
The new two-battalion regiment will be known as The Royal Welsh but will have the historic names later in the title.
This contrasts with new Scottish regiments, which can display their old name first, and the new name second.
Conservative Shadow Welsh Secretary Bill Wiggin said the decision was a reflection of Wales' "second class treatment".
The two halves of the new Welsh regiment will be known as 1st Battalion The Royal Welsh (The Royal Welch Fusiliers) and 2nd Battalion The Royal Welsh (The Royal Regiment of Wales).
But Mr Wiggin said a far better settlement had been arranged for the regiments' Scottish counterparts, including the Black Watch.
The battalions forming the new Royal Regiment of Scotland are to keep their traditional names and put the new amalgamated name in brackets.
Mr Wiggin said the change had important implications for the Welsh regiments' income from legacies from former members, which are paid while the regimental name remains.
He said: "The government has made a terrible mistake today thinking that this type of change is unimportant.
The new Welsh regiment can display its old names later in its title
"After beating every enemy who ever stood against them from Napoleon to Hitler, with many others too numerous to mention, this wonderful history and source of immense Welsh national pride has been ended today by one Geoff Hoon. "
His comments about the difference in the names for Welsh and Scottish regiments were echoed by Major Bob Lake, of the Royal Welsh Fusiliers.
Major Lake said the position the regiment had found itself in over retaining its name was the opposite of what it had campaigned for.
Speaking from the regimental HQ at Hightown Barracks in Wrexham, he told BBC Wales: "We have lobbied hard to retain our regimental name. The concession, however, has been given to Scotland.
Major Lake said he was sure the new combined regiment would work because Welsh regiments had a tradition of working together.
Geoff Hoon has allowed the Black Watch to keep its name prominent
But he said that was concerned that the Fusiliers' links with north Wales may be lost in the change over.
He said: "I don't think the Secretary of State has much of a tradition of changing his mind, but given the fact that Scotland has gained the concession which we asked for, it does seem rather strange."
The Royal Welch Fusiliers is the oldest regiment in Wales.
It has fought in every major campaign since the Battle of the Boyne in 1690 and its battle honours include Blenheim and Waterloo.
The Royal Regiment of Wales dates from 1969 when the South Wales Borderers, which won nine VCs for its action at Isandhlwana and Rorke's Drift in South Africa, and Welsh Regiment were amalgamated.
Defence Secretary Geoff Hoon said the changes would make the army "more robust and resilient" and were the "only sustainable way in which to structure the infantry for the long term".