Baath Party members who were loyal to Saddam Hussein will take part in the reconstruction of Iraq, according to Geoff Hoon.
Looting is testing British troops in Basra
"They had a system of administration that will deliver," the defence secretary told The Observer.
And many were "perfectly decent people who have not participated in any
Mr Hoon later told the BBC it was important to use policing to stamp out the looting which had happened in Iraqi cities.
The defence secretary also said he was confident Saddam Hussein or his remains would be found - as would weapons of mass destruction.
There has already been anger in the southern city of Basra after the man chosen by the British forces there to run the city was revealed to be a Baath Party member.
Mr Hoon told the newspaper: "It is understandable people that have lived in dread and terror of this organisation should go and kick in a few doors."
But he added: "We have to ensure it does not get out of hand."
The defence secretary told BBC Radio 4's World This Weekend on Sunday that he did not condone looting, which had produced "some awful images".
"We will try and stop looting wherever it occurs, but it has been difficult in some of the cities in the immediate aftermath of their liberation," said Mr Hoon.
There was not a consistent picture over Iraq, he said, so coalition troops were handing out food in southern cities and still fighting in parts of the north.
The first patrols between British forces and former Iraqi police officers had now begun in Basra and were a "good sign for the future", he said.
Mr Hoon said it was dangerous to speculate about what had happened to Saddam Hussein.
Hoon: Weapons finds should be independently verified
But he added: "I am still confident that either he or his remains will be found."
He was also "convinced" there were weapons of mass destruction in Iraq and argued any finds should be verified by an independent authority.
The AFP news agency later reported senior US Marines officers saying they had found 278
artillery shells carrying a substance which tested positive as a
Jack Straw is flying to Bahrain on Sunday as he embarks on a tour of Gulf states to discuss the reconstruction of Iraq.
The foreign secretary will visit Qatar, Saudi Arabia and Kuwait, where he will meet US interim administrator for Iraq, Jay Garner.
Foreign Office Minister Mike O'Brien will travel to Syria and Iran, who fear they could become American targets in future.
Mr Straw and Mr O'Brien will discuss a "range of bilateral issues, as well as Iraq", according to the Foreign Office.
On Thursday Mr Straw warned Syria "to end any and all assistance to the Iraqi
regime and to co-operate fully with the people of Iraq and with the coalition forces".
He urged Syrians to "make a decisive break with the past and so contribute to a better future for the entire region".
On Sunday Secretary of State Colin Powell warned Syria not to offer any "safe haven" for Iraqi officials fleeing Baghdad.
Syria insists it has offered no help to the Iraqi regime, accusing the US of using the claims to divert attention from American failures.
On Saturday, Jacques Chirac has telephoned Tony Blair to underline his argument that only the UN can effectively restore normality to Iraq.
Downing Street said the two leaders discussed Iraq and other international issues for half an hour.
The call came after President Chirac rang to brief Mr Blair on his discussions with fellow anti-war leaders, German chancellor Gerhard Schroeder and Russian president Vladimir Putin, in St Petersburg, Russia.
Mr Blair had reportedly refused an invitation to attend.
The prime minister and US President George Bush agreed in Belfast this week that the UN should have a "vital role" in the reconstruction of Iraq.
On Monday, Mr Blair will update MPs on the latest developments in Iraq in a Commons statement.