Ex-military chiefs could be barred from contact with ministers and Ministry of Defence officials after several were secretly filmed claiming to be able to help secure lucrative contracts for arms firms, Defence Secretary Philip Hammond said.
At least one of the senior armed forces figures caught by the Sunday Times was still subject to the two-year ban on lobbying imposed on departing personnel on leaving public service and any breaches would be investigated, he indicated.
But he said he was satisfied that "robust" procedures were in place to ensure procurement decisions could not be influenced, suggesting the generals and others were guilty of "bigging up their capabilities".
They were filmed in talks with reporters posing as representatives of a South Korean weapons manufacturer seeking to recruit them to help sell "drone" aircraft to the UK Government.
Among those targeted were Lieutenant General Sir John Kiszely, ex-head of the Defence Academy and now president of the Royal British Legion, former MoD procurement chief Lieutenant General Richard Applegate, Admiral Sir Trevor Soar, commander-in-chief fleet of the Royal Navy until earlier this year, and ex-head of the Army Lord Dannatt.
All deny breaking any rules, the newspaper said, and insist they had the best interests of the military at heart.
Sir Trevor is reported to have said he could simply "ignore" the two-year ban imposed by the Advisory Committee on Business Appointments because the enforcement system was ineffective.
The newspaper also claims that Sir John and Lt Gen Applegate said they lobbied on deals while they were in the "purdah" period and that Sir John talked of being able to speak to senior figures at a Remembrance Day event.
Lord Dannatt said he could speak to the MoD's top civil servant, a former school friend, it said.
Mr Hammond said the revelations were "deeply damaging to the individuals concerned and their reputations" but insisted there was "no way that retired officers influence the way that military equipment is procured".