The Defence Secretary was due to oppose an application by human rights lawyers for a court declaration that there is "a real risk" that detainees are in danger of being abused and tortured in Afghan jails.
The application is being brought on behalf of Afghan farmer Serdar Mohammed, 24, from the Kajaki district of Helmand Province in Afghanistan, who says he was arrested by UK forces in April 2010 while working in the fields of his family's farm.
He alleges he was tortured into giving a false confession that he was a member of the Taliban after being transferred to the NDS facility at Lashkar Gah.
Today Dinah Rose QC, appearing for Mohammed, told Lord Justice Moses that a letter had been received from the Defence Secretary stating that, "in the light of new information which has not been disclosed or described, there are currently reasonable grounds for believing that UK-captured detainees who are transferred to LashKar Gah would be at real risk of serious mistreatment".
Ms Rose said the minister had also decided to impose "a complete moratorium" on transfers to any NDS custody facility.
Miss Rose added that the minister's letter also stated that he would not now be contending in court that UK-captured detainees could currently be lawfully transferred to NDS custody.
In earlier hearings of the Mohammed case, his lawyers have asserted that Asadullah Khalid, the head of the NDS, is widely known to be personally involved in the torture of detainees.
They are accusing Foreign Office minister Lady Warsi of failing to question assurances given by Mr Khalid.
Later an MOD spokesman said: "Detention operations are an important part of our work in Afghanistan - helping to protect UK service personnel, our allies and Afghan civilians.
"The UK takes its legal and policy obligations to detainees captured by UK forces very seriously and does not transfer detainees to any facility where there is a real risk of mistreatment.
"In light of new information, the Secretary of State has decided to reintroduce a ban on transfers into Afghan custody while we review the risks of mistreatment.
"Measures are being put in place to ensure our operational effectiveness is not compromised.
"The MOD will continue to defend all other aspects of the Serdar Mohamed judicial review claim. As this matter is subject to ongoing legal proceedings, it would be inappropriate to comment further at this stage."
In court, James Eadie QC, appearing for the Defence Secretary, denied there had been a concession by the minister and said he had simply been applying his policy of keeping under review whether there was a real risk to detainees being transferred.
When new information had come to light of a potential risk, he had acted accordingly and reintroduced a moratorium that had previously been in place.
Richard Stein from the human rights team at Leigh Day & Co, who is representing Mohammed, said: "The Defence Secretary has conceded that a block on UK detainee transfers to the Afghan authorities is necessary and will continue until further notice.
"We welcome the secretary of state's decision, a decision which we have been arguing he had no choice but to make since the beginning of the year, that it is too risky to transfer those detained by the UK in Afghanistan to the Afghan authorities.
"The evidence disclosed to us during the course of these proceedings makes clear that there is a real risk of torture, serious mistreatment and of a flagrant denial of justice to those transferred and we must not allow the appalling abuse from which our client suffered to be happen to anyone else."
The case will return to court next week to consider the extent to which, if any, Mohammed's own transfer and alleged subsequent torture breached the European Convention on Human Rights.