Ex-military chiefs faced the threat of being barred from contact with ministers and defence officials after several were secretly filmed claiming to be able to exert influence on behalf of arms firms in a Sunday Times sting.
Defence Secretary Philip Hammond said that if an MoD inquiry found the senior figures had abused the access that came with their previous high rank then it could be "shut down" in future.
And the future of one senior figure as the figurehead of the Royal British Legion has come under review by the charity after he was alleged to have told undercover reporters his role could help bypass restrictions.
Labour demanded "full disclosure" of any dealings between those caught by The Sunday Times sting and ministers, personnel and officials dealing with defence contracts.
But while Hammond said the revelations were "deeply damaging" to the reputations of the individuals concerned, he insisted there was "no way that retired officers influence the way that military equipment is procured".
Undercover reporters posing as representatives of a South Korean weapons manufacturer seeking to sell unmanned "drone" aircraft to the UK Government set up and filmed meetings with the senior ex-military figures.
The newspaper said two - former Defence Academy head Lieutenant General Sir John Kiszely and former MoD procurement chief Lieutenant General Richard Applegate - claimed to have lobbied on deals in breach of Whitehall rules.
Retiring officers are subject to a two-year "purdah" period after leaving public service during which they cannot take on private sector roles related to their previous job.
Admiral Sir Trevor Soar, commander-in-chief fleet of the Royal Navy until earlier this year, is alleged to have said he could simply "ignore" the two-year ban because the enforcement system was ineffective.
And ex-head of the Army Lord Dannatt claimed he could speak to the MoD's top civil servant, a former school friend.
All deny breaking any rules, the newspaper said, and insist they had the best interests of the military at heart.
On top of the MoD investigation, the report also prompted a high-level review by the Legion into whether Sir John, a decorated Falklands hero, had abused his position with the charity.
He is alleged to have said he could push the fake firm's interests to figures such as the Prime Minister in a private box at the Festival of Remembrance next month at the Royal Albert Hall.
And as the representative of the veterans' charity, he could also easily fix meetings with Armed Forces Minister Andrew Robathan that would otherwise be refused - where commercial issues could then be raised in conversation.
Legion Director General Chris Simpkins said the matter will be referred to its governance committee.
"The honorary position of National President falls within this code and should not be used for commercial gain or in order to gain access to politicians and senior military figures for purposes unrelated to his position as National President," he said.
"The findings of the governance committee will be reported to the board of trustees for any necessary action."
Sir John told the Sunday Times he had always kept his commercial interests "entirely separate" from his role with the Legion and had never used access gained through it to discuss any business interests.
An MoD spokesman said Robathan had never discussed equipment issues with him in his former role as veterans minister and had not met him since being appointed Minister for the Armed Forces.
Hammond said it was "sensible" for the MoD to maintain contact with retired officers - and dismissed much of what they had told the reporters as "bravado".
"But if they are abusing that access for commercial purposes then we will have to tighten it up or maybe even shut it down. That is something we will now look at," he told the BBC.
He added: "Clearly at least one, possibly more, of the individuals named in the Sunday Times piece were still under the terms of the two-year restriction that applies after they have left the service.
"If we find that people are not abiding by the advice they are given then we will need to look at whether there are steps we can take to shut down their access to ministers and officials."
Lord Dannatt, who was an adviser to David Cameron before the 2010 election, said he offered to "facilitate conversations" but nothing that would be in breach of lobbying rules and that he rejected an £8,000 monthly fee offer.
Lord Stirrup, the former chief of the defence staff who was also targeted, said the report painted a "totally false picture" of the interest he had shown in helping the invented arms company.
"I was interested because they were purporting to be developing technologies that could save people's lives. I said I could facilitate conversations with people in the military. I did not offer to lobby anyone on their behalf," he said.
Shadow defence secretary Jim Murphy said: "These are grave allegations that have to be fully investigated. We need to know every detail, every meeting and every contact between those recorded in this video and those still serving in the MoD.
"Specifically we need to know if they have met any MoD officials dealing with any defence equipment contracts.
"Britain has a global reputation in defence procurement and it is essential that it is maintained. There has to be total clarity that not a single penny piece of defence spending has been influenced by this type of rule breaking lobbying."