Mr Chertoff said new procedures should cut identification errors
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Fewer than 2,500 people are on the US "no-fly" list, Homeland Security Secretary Michael Chertoff has said.
Reports that hundreds of thousands were on lists barring them from flying or subjecting them to extra security were "simply false", Mr Chertoff said.
His comments came as he outlined new screening procedures aimed at reducing errors in identifying terror suspects.
The American Civil Liberties Union estimates there are some one million people on US government watchlists.
Speaking on Wednesday, Mr Chertoff said that fewer than 2,500 people were on the US "no-fly list" - which prevents them from boarding an aircraft because intelligence indicates they pose a threat.
Of that number only 10% are US citizens, he said.
The Transport Security Administration (TSA) had fewer than 16,000 people on its "selectee" list - which means they are subjected to extra scrutiny at airports - and very few of those were Americans, he added.
Civil rights groups say the actual number on the government's database is far larger, running to hundreds of thousands.
They also point to the number of cases of mistaken identity where people with names similar to individuals on watchlists are subjected to extra security or even prevented from flying.
Thousands of passengers have asked for their names to be removed from the lists.
Currently, airlines check names against lists sent to them by the TSA to determine if people need additional screening or should be barred from boarding, but procedures vary between airlines and they do not always have the most up-to-date lists.
False positives
Mr Chertoff said from next year the responsibility of comparing names on lists would be transferred to the TSA.
Under the programme, called Secure Flight, travellers will have to give their full name, date of birth and gender when making reservations.
Airlines will then send encrypted information to the TSA which will compare the passenger information with the updated watchlists, and notify the airline if there is a problem.
"That's going to eliminate the false positives, and it's going to upgrade our security," Mr Chertoff said.
The Secure Flight programme had been held up amid privacy concerns, which officials say have now been addressed.
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