The Ministry of Defence has come under fire over claims it spent money intended for military charities.
Shadow defence secretary Nia Griffith accused the department of a "scandalous" misjudgment, after she claimed monies allocated from the Libor fund were spent on core services.
Former chancellor George Osborne set up the fund in 2012 to support veterans and emergency services charities.
It was set up using money from fines imposed on bankers involved in the Libor scandal - where bankers fixed the inter-bank interest rates.
Ms Griffith, speaking in the Commons, said: "How is it that over half a million pounds of Libor funds has been spent by the Ministry of Defence in support of armed forces welfare?"
She added: "Isn't it time now for the Secretary of State to admit that this was a serious misjudgement using the Libor funds in this scandalous way and can he tell us when his department will be paying this money back?"
Allegations around the spending of the Libor fund at the MoD first emerged in The Sun in February.
Defence Minister Tobias Ellwood then said that he would "look at the details", saying there was a "grey area" in how the fund was allocated.
Responding to Ms Griffith's question, Defence Secretary Gavin Williamson said it was not his department who administered the fund, but the the Treasury.
He said: "So much of that Libor funding has made such a difference, not just to those who've ceased to serve in our armed forces, but a real difference to those who continue to serve in our armed forces and we're very grateful for the impact that that has had and the positive impact it has had on so many of our service personnel."