Substandard military housing risks losing experienced and skilled personnel, a report has warned.
The Public Accounts Committee (PAC) said too many military personnel remain in "poor" housing despite the Ministry of Defence (MOD) spending £135 million on refurbishments.
The report said satisfaction "only rose slightly", despite the MOD's multimillion-pound scheme refurbishing around 3,800 homes.
PAC chairwoman Meg Hillier MP said: "Too many military service personnel find themselves in living quarters where the standard is simply not good enough.
"Poor accommodation puts a strain on working and family life and hits morale and retention rates.
"The nation cannot afford to lose experienced and skilled personnel simply because their homes are not up to standard."
Military housing satisfaction increased from 62% to 64% in the past year.
The MOD told the committee it would set the "demanding target" of raising that to 68% this year.
However, the report said maintenance satisfaction fell by a third to 51%.
Ms Hillier told Forces News: "We build aircraft carriers, we train pilots to fly some of the most sophisticated aircraft in the world and the MOD can't actually maintain the housing.
"It is quite extraordinary that they can't get this basic right and they really need to step it up."
The PAC was also critical of the military being "slow" to react to changing social attitudes.
It said that only those who are married or in a civil partnership are "entitled" to accommodation, whereas those in long-term relationships only remain "eligible".
Ms Hillier also urged the MOD to "urgently reduce" the number of empty properties it holds while thousands of people nationwide sit on waiting lists.
Nearly one in five MOD properties, which adds up to 10,000, lie empty, according to the report.
The watchdog also called on military bosses to "negotiate hard" on taxpayers' behalf when negotiating future rent levels with the private housing provider it sold its estate to.
That sale, in 1996, was criticised by the PAC as having "badly let down" taxpayers.
An MOD spokesperson said: “Providing good quality accommodation is one of our top priorities, and we are determined to improve the experience of service personnel and their families.
“We are investing more than £80 million a year to improve the quality of our homes, while building over 1500 new properties for service families.
"We are also modernising the way we provide accommodation, introducing new measures to support co-habitation and a pilot scheme that will test how we can incorporate privately rented homes into our accommodation offer.”