Corporal Tomos Stringer, 23, had booked to stay at the Metro Hotel, in Woking, Surrey, while helping organise the funeral of a friend killed in action.
On arrival, reception desk staff asked him for identification and he handed them his military pass.
Corporal Stringer, who was not dressed in uniform at the time, was astonished when they turned him away, claiming it was not company policy to allow Armed Forces personnel to stay at the hotel.
Yesterday the Metro Hotel, owned by American Amusements Ltd, also based in Woking, at first declined to comment.
But after news of Corporal Stringer's treatment emerged, it was flooded with angry calls from the public and issued an apology, blaming a mistake made by the receptionist on duty.
Last night his mother Gaynor, 60, criticised the 'outrageous' treatment of her son. She has contacted Defence Minister Derek Twigg, who called the hotel's actions 'deplorable'.
Mrs Stringer, a volunteer in a charity shop, said: 'It's a disgraceful way to treat someone who is prepared to give his life for Queen and country.
'Soldiers in America are treated like heroes and get applauded everywhere they go, but our boys are being treated like scum...
My son thought the whole thing was awful,' he said. 'Had this happened to a Muslim or black person it would, quite rightly, have been discrimination. It should be the same to turn away someone because he's a soldier.
'Tomos ended up sleeping in his car with his arm in plaster, which is terrible.'
The incident occurred on June 22 while Corporal Stringer, of Pentrefelin, Criccieth, North Wales, was on four weeks' recovery leave.
He had broken his wrist jumping from his military wagon when a truck in front hit a roadside bomb. Doctors sent him home for further treatment after it failed to heal.