Ian Huntley admits setting fire to the bodies of Holly Wells and Jessica Chapman with petrol, the Soham trial has heard.
Ian Huntley is accused of murdering Jessica Chapman and Holly Wells
The admission was one of a series made by Mr Huntley's defence team on the last day of prosecution evidence.
Earlier the jury heard that Mr Huntley, who denies murder, told his mother he was "adamant" he remembered the girls leaving his house.
He made the claim in a secretly taped two-hour phone call from prison.
During the call in October 2002, more than two months after the girls' bodies were found, Mr Huntley denied Jessica and Holly had been in the boot of his car, saying they had only sat on the edge of it as they chatted to him on the night they went missing.
According to a transcript of the taped conversation read to the jury, he told his mother: "I couldn't fit two bloody girls in my boot, I can hardly fit six shopping bags in my boot."
He now admits the girls died in his house and he removed their bodies and used his Ford Fiesta to dump them.
The Old Bailey also heard a partial recording of a call between Mr Huntley's mother, Lynda Nixon, and his girlfriend at the time, Maxine Carr.
Ms Carr denies helping an offender and conspiring to pervert the course of justice.
The recording was played aloud at the request of Ms Carr's defence team.
The court first heard a sobbing Ms Carr telling Mr Huntley's mother: "I don't understand why this had to happen."
In the phone call, made from Holloway Prison on 18 October last year, Ms Carr told Mrs Nixon she wanted to speak to Mr Huntley.
Mrs Nixon was surprised to hear Mr Huntley had admitted to Ms Carr the girls were in the house.
Mrs Nixon said she had asked Mr Huntley whether the girls had gone into the house, and he said he could not remember.
"But it was funny, Maxine, I got this distinct impression he could remember," she said.
Mrs Nixon added: "Let's just keep this between the two of us for now, don't worry I won't drop you in it."
Five days later Mr Huntley spoke to his mother from Woodhill Prison, and both were unaware the conversation was being recorded.
He said he was "wound up and upset" because he could not explain things to the police, according to a transcript of the taped conversation read to the jury.
"I know if I could talk to the police, me and Maxine could be out of here," said Mr Huntley.
He said: "There's nothing I can do if the doctor said I am unfit. Like yesterday, I just shutdown yesterday, mum.
"You've no idea what that feels like ... you find yourself
huddled up next to a toilet on the floor," said Mr Huntley before he began to cry.
Turning to the events of Sunday 4 August Mr Huntley told Mrs Nixon the girls had come into the house because one of them had a nosebleed.
'Nails in my coffin'
"I remember them girls leaving my house, I'm adamant, I'm 100%."
Mr Huntley said he had been wondering if somebody else might have followed the girls, saying he was sure they left his house at 1835 BST.
"Now I know they left at 25 to seven because I put a quiche and a jacket potato on and I had my tea at seven," he said.
The accused discussed some of the forensic evidence the police had found, such as hair on the girls' clothing and fibres in the boot of his car.
He said: "Someone's been following those girls, seen those girls at my bloody house knowing full well they'd find some DNA at my house... and put the clothes at the school so they'll think I've done it."
He urged Mrs Nixon not to tell his brother Wayne about their conversation.
He said: "Don't tell Wayne any of this because if this comes from anyone to the police rather than me it's just hammering nails in my coffin."
At that point the police hadn't "got a clue" what he was going to say, said Mr Huntley.
He said: "All I can do is just be patient and pray I can get me mental state back ... sit down in front of police and not shut down."
When mother and son talked about the size of Mr Huntley Mrs Nixon said he wasn't a "strapping six footer."
Mr Huntley replied that he was 12 stone and fit but did not think he was strong enough to "restrain two screaming kids especially without somebody hearing something".
Suspicious that conversations may be recorded, Mr Huntley threatened that if "they" were listening he would sue them when it was all over.
The case has been adjourned until Monday.