Shortcomings in Uganda's army were to blame for the high number of deaths in the weekend massacre, President Yoweri Museveni has said.
Many people sustained serious burns when their huts were torched
He said the army should have been in closer contact with the self-defence militia guarding the refugee camp which was attacked, near the town of Lira.
He apologised on behalf of the army to survivors of the attack, in which 200 people were reportedly killed.
The killings have been blamed on rebels of the brutal Lord's Resistance Army.
But a rebel spokesman said civilians were caught in the crossfire as rebels defended themselves against a government attack.
"On behalf of the army, I apologise to the people," Mr Museveni said as he visited Lira hospital, packed with those who survived the attack.
He has however disputed the eyewitness reports that 200 civilians died in the massacre, putting the figure at 80.
He transferred the local army commander to headquarters for further training.
He says he will set up camp in northern Uganda, to personally supervise the fight against the rebels.
Some northern MPs have accused the army of ignoring their plight and not wanting to end the rebellion because it gives commanders the opportunity to make money.
The BBC's Will Ross in Lira says shocked survivors have been returning to the scene of this latest massacre to bury their relatives in makeshift graves.
Some 4,000 people had lived in the camp, after fleeing their homes because of fighting elsewhere in northern Uganda.
Mr Museveni said the camp had not been officially authorised.
As the insurgents surrounded the camp, 26km (16 miles) north of Lira, many people ran to their grass huts and were burned as the insurgents torched their houses, said local MP Charles Angiro.
UN Secretary General Kofi Annan has strongly condemned the weekend attack, which the International Criminal Court says it will investigate.
A UN relief team is due in Lira to decide whether it is safe for aid workers to travel there, and to assess the needs of several thousand people driven out of the camp.
Altogether the conflict is said to have displaced at least one million people.
The camp was being guarded by a local self-defence militia which was outnumbered and outgunned, an army spokesman said.
The LRA, led by self-proclaimed mystic Joseph Kony, are known for kidnapping young children to become fighters or sex slaves.
Our correspondent in Lira says that although the Ugandan army claims the war against the brutal LRA rebels is being won, the cycle of civilian massacres makes it hard for people to believe.