Home Secretary David Blunkett has announced a review of Buckingham Palace security following a lapse ahead of President Bush's visit.
Mr Bush was officially welcomed by the Queen at Buckingham Palace
An undercover reporter worked for two months as a footman at the Palace after applying using a false reference.
Mr Blunkett told the House of Commons that the Security Commission would conduct a thorough review.
He said employment checks on the man were "insufficient" but appropriate criminal checks were carried out.
Meanwhile Mr Bush carried on with his engagements, making a keynote speech at Banqueting House in London.
In it, he defended the war on Iraq and he vowed to defeat terrorism.
He said the US and UK sought "the advance of freedom and the peace that freedom brings".
The Daily Mirror said its reporter Ryan Parry managed to get a job despite unprecedented security arrangements throughout London in the run-up to the presidential visit.
Buckingham Palace said on Wednesday that it would not rule out taking legal action against the newspaper.
Mr Blunkett said that while the day-to-day police protection of the Royal Family was crucial, checks on other people who work closely alongside the royals were also "key".
He said there was a comprehensive system of security and criminal checks as well as normal employment checks - "in these circumstances even more vital".
Security and criminal checks on Mr Parry were carried out "robustly and correctly," Mr Blunkett said.
"But the employment checks proved insufficient."
Buckingham Palace was reviewing its vetting procedure, but Mr Blunkett felt the "system as a whole" needed urgent review.
The terms of reference and timetable for the review by the Security Commission, an independent body responsible for overseeing breaches of security, have yet to be decided, but Mr Blunkett said he hoped to have an interim report by the end of the year.
He expected the review to cover "all aspects of the process of checking those who form part of the Royal Household".
"One of the strengths of our democracy is that such breaches are open to scrutiny, that we can learn quickly from them and that nothing is swept under the carpet."
In August, Mr Parry responded to a job advertisement on a recruitment page of the Buckingham Palace official website.
On his CV, he left out any mention of his journalistic career and included one
fake reference and a real one, the newspaper claimed.
Scotland Yard has put in place a £5m operation which will see more than 5,000 police on the capital's streets for the state visit, while hundreds of armed US security staff will also guard the president.
"All the agencies involved are vigorously looking at the issues," Scotland Yard deputy assistant commissioner Andy Trotter said.
"It's quite clear that the man is not a terrorist and he's not a criminal.
"But it's most unfortunate that the Palace has employed a journalist and I'm sure that those who have that responsibility will want to look carefully at their processes and procedures."
A White House spokesman told the BBC that despite the security breach at the palace, "the White House still has confidence in British security".
The alleged security flaw will compound the embarrassment caused by comedian Aaron Barschak, who gatecrashed Windsor Castle during William's 21st birthday party in June.
Shadow home secretary David Davis pressed Mr Blunkett on who would accept responsibility, particularly after his personal pledge on royal security following the Windsor Castle breach.
"The seriousness of this security lapse cannot be overestimated," he
"Given this undertaking that you gave to this House, do you accept personal
responsibility for the events of the past few days, and will you act, and act
soon, to bring to an end this catalogue of incompetence?" he asked.
Mirror editor Piers Morgan said the paper used "very basic subterfuge and got incredible access".
"To our surprise and then mounting horror we discovered that our man with no training, no experience at all, no real vetting was in very close proximity to the most important people in our country," Mr Morgan told BBC Radio 4's Today programme.
He described the reference checking as "scandalous" and "shoddy".
Mr Morgan alleged that someone from the palace rang Mr Parry's local pub where he had given a name as a character reference.
"That person had left and they shouted down the bar: 'Does anyone know Ryan Parry?' To which some man in the corner drinking, said: 'Oh, I know him, he's a good guy'."