Minister for Defence People and Veterans Johnny Mercer MP has defended the Government amid the funding crisis of military charity Combat Stress.
The mental health charity last month announced it would no longer be able to take on new cases in England and Wales over a lack of funding.
But Mr Mercer said the idea that the Government suddenly stopped supporting the charity is "totally untrue".
"Combat Stress have known for a long time that their model of care is not what is deemed the most effective way of treating or meeting the challenge of the exponential growth in people presenting mental health challenges from service," he said.
"I pay tribute to them for all the work that they've done over the years but this idea that suddenly the Government's pulled the rug is totally untrue.
"They've known that the service in the contract that they had for a while was coming to an end."
In January, Combat Stress announced its income had fallen from £16 million to £10 million during the financial year, partly due to a cut in its NHS funding support.
It had been receiving around 2,000 referrals for a treatment a year and the charity said the decision to turn down new cases had been taken "with great sadness".
In the House of Commons on Thursday, Combat Stress vice chairman and Conservative MP Sir Bernard Jenkin said one person who was turned away from the charity later took their own life.
Mr Mercer, who heads up the Office for Veterans' Affairs, said the Government is making progress in providing improved care for veterans.
"We are undergoing a shift," the former Army officer said.
"For a long time, people like Combat Stress and Help For Heroes and other big charities have asked for the Government to realise its responsibilities to our veterans.
"That's exactly what it's doing, with the High Intensity Service that I've asked to be brought forward, so we catch up some of these people who now can't be treated by Combat Stress."
"I am confident that we will have the world's best mental healthcare for our veterans."
A recent survey by BFBS found 45% of people think those leaving the military will fail to get a job but Mr Mercer said the view that veterans are "mad, bad or broken is total garbage".