England manager Gareth Southgate said both Phil Foden and Mason Greenwood have been dropped from the squad for Tuesday's Nations League game in Denmark after breaching Covid-19 protocols.
Speaking at a news conference, Southgate said they had both been isolated from the rest of the squad and would travel back from Iceland to the UK separately.
Both players made their full international debuts against Iceland, 20-year-old midfielder Foden from the start and forward Greenwood, 18, as a substitute.
Like all of the England squad they were subject to strict Covid-19 health protocols to avoid Iceland's quarantine rules.
These included not meeting anyone outside of the England squad and staff during the team's stay in Iceland.
"Unfortunately this morning it was brought to my attention that the two boys have broken the Covid guidelines in terms of our secure bubble – had to decide they couldn't have interaction with the rest of the team," Southgate said.
"We are still getting the depths of the information. Still getting to grips with the detail. I'm not going into any more details until I'm clear of everything. Obviously they have been naive.
"These are two boys I don't know particularly well at the moment so I can't speak in great depth. I have got to try and speak with them later in the appropriate way. They have got responsibilities and they have apologised.
Southgate also said that the right precautions had been taken while the team is still in Iceland so as not to put the Denmark game in Copenhagen game at risk.
"We are very clear that no other members of our party have been in contact with the two players – [they] couldn't join us for breakfast or training. It is a very serious situation and we have treated it that way," he said.
"Obviously they have been naive, we have dealt with it appropriately. I recognise their age but the whole world is dealing with this pandemic.
"I'm a father with children, young adults, I know people get things wrong. I'm not excusing that in this instance."
Manchester City issued a statement saying Foden's actions were "totally inappropriate" and "fell well below the standard expected of a Manchester City player and England international".
Foden would later issue a public apology on social media. He wrote on Twitter: "Following the story whcih has emerged today regarding my actions in Iceland, I want to make a full apology.
"I apologise to Gareth Southgate, to my England team-mates, to the staff, supporters and also to my Club and my family.
"When I was called up by Gareth for these games, my first reaction was that of immense pride. To pull on that shirt for the senior team in my England debut was an incredible privilege.
"I am a young player with a lot to learn, but I am aware of the huge responsibility I have in representing Manchester City and England at this level.
"On this occasion I made a poor decision and my behaviour didn't meet the standards expected of me.
"I will learn a valuable lesson from this error in judgment and I wish Gareth and the team good luck this week."
A Manchester United statement said the club are "liaising with the Football Association" and were "disappointed" with Greenwood.
It is the latest off-field incident involving an England player in recent weeks, following United captain Harry Maguire being given a suspended prison sentence after being accused of various charges following an incident during a family holiday on the Greek island of Mykonos