The new defence secretary said allowing the "return of the Taleban and al-Qaeda" would pose "a clear and present danger to the security of the UK".
He also said there was "tangible evidence" of progress in Iraq.
His Tory shadow Liam Fox called for a review of policy on "decompression" - the term used for bringing personnel out of war zones for a period of time.
Mr Hutton, in his first defence debate since taking up the role, acknowledged it had been a "difficult year" with 35 British service personnel killed in Afghanistan.
'Clear and present danger'
He said he had to make clear to people why "we are asking the men and women of the armed forces to potentially pay the ultimate price".
"It is to protect our freedom, our values, our security as a nation," he said.
Mr Hutton said those who questioned the mission had to be clear about the alternative: "This is not a discretionary war. The return of the Taleban and al-Qaeda, the power to recreate a safe haven for international terrorism, would constitute a disaster for the international community.
"It would represent a clear and present danger to the security of the UK. We cannot allow that to happen."
the government announced it would invest £700m on new and upgraded vehicles for Afghanistan - the Taleban has increased its use of roadside bomb attacks.
Mr Hutton said some of the money would be spent on training vehicles - an area where, he admitted, "the ministry has been very heavily criticised".
More than £3.6bn had been approved for urgent operational requirements, MPs were told.
On Iraq he said there had been "real and tangible progress" and the security situation in Basra had "significantly improved".
"Once we have completed our key tasks in the south, we expect to see a fundamental change of military mission in Iraq in the early months of next year," he added.
For the Conservatives, Dr Fox agreed that the main reason for British troops to be in Afghanistan was for "our national security".
He said it was not possible to have a "purely military victory" but was possible to have a "purely military defeat".
He urged the government to reconsider their stance on decompression - when troops returning from Afghanistan and Iraq are placed in a monitored environment in Cyprus, to "wind down" ahead of returning to normal life.
Dr Fox said: "I was quite surprised to discover that the civil servants in the FCO (Foreign and Commonwealth Office) who are in Iraq get a compulsory decompression out of theatre every seven weeks.
"We are lucky that some of our soldiers after a six month tour are getting much more than 48 hours decompression."
He said it was "essential" to soldiers' wellbeing and he hoped that ministers would conduct an immediate review.
Liberal Democrat spokesman Nick Harvey said it was an "open secret" that Britain had had talks with the Taleban in Afghanistan.
"It's pretty much an open secret that the Afghanistan government does this, that tribal elders do this, that the Pakistanis do this, and that we do this - and it is entirely right that we should," he said.
He added: "It's entirely logical and right that these sorts of dialogue have to take place if we hope ever to get to a point where they could be reconciled and made part of a lasting solution."
Anti-terror plan 'proportionate'
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