Ben Wallace told parliament that the error, which saw the hundreds of Afghans openly included rather than blind copied on a weekly email sent out late afternoon Monday, was "unacceptable".
Vulnerable recipients who are potentially eligible for relocation following the Taliban takeover in Afghanistan had been warned as soon as the blunder was spotted and given advice on what to do, he said.
"It is an unacceptable level of service... and on behalf of the ministry defence I apologise," Wallace told MPs.
"To say I was angered by this was an understatement and I immediately directed investigations take place," he added.
"One individual has been suspended pending the outcome of the investigation and processes for data handling and correspondence processing have already been changed."
Wallace confirmed the email was sent by a defence ministry official to a group of Afghans potentially eligible for relocation to Britain and includes around 260 still inside Afghanistan.
Many of the email addresses also contained photographs.
An interpreter told the BBC the mistake "could cost the life of interpreters, especially for those who are still in Afghanistan".
- 'Criminally negligent' -
Wallace insisted his department would cooperate with a probe by Britain's data regulator, while pledging to continue processing evacuations.
"I offer the reassurances that the scheme will continue to operate, bring people back to the United Kingdom, however many are eligible, for however long it takes," he said.
But the mistake has angered some members of the ruling party.
Conservative MP and former veterans minister Johnny Mercer called it the data breach a "criminally negligent performance".
Tobias Ellwood, the Conservative chair of parliament's defence committee, urged Wallace to step up the efforts and even "to find clandestine means of leading these people to safety" if necessary.
The email error is the latest of several such mistakes by the defence ministry, both in Britain and overseas.
In August, The Times newspaper reported that it had found contact details of staff and job applicants left behind at the British embassy compound in Kabul, potentially endangering them.
Wallace told lawmakers his department has received more than 68,000 application enquiries to the UK's Afghan Relocations and Assistance Policy, set up to help interpreters and others.
Britain has airlifted more than 15,000 people from Afghanistan since the Taliban captured Kabul, both UK nationals and Afghan allies.
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