Home Secretary John Reid has rejected calls from the Conservatives and the Liberal Democrats for an independent inquiry into the 2005 London bombings.
Opposition parties renewed their calls after it emerged at a bomb plot trial that two of the 7/7 bombers had been tracked by MI5 for a time during 2004.
But Mr Reid said an inquiry would cause a "massive diversion of resources" from the security services' operations.
He said the MPs and peers who probed 7/7 last year had known of the link.
Instead of a public inquiry, last year the Home Office published a "narrative" of events, along with a report from Parliament's Intelligence and Security Committee (ISC) - which reports directly to the prime minister rather than MPs.
The ISC report revealed that Mohammad Sidique Khan and Shehzad Tanweer, two of the London suicide bombers, had appeared on the "periphery" of the investigation into a fertiliser bomb plot but had not been identified and listed as potential terrorists.
Mr Reid said MI5 had taken the unprecedented step of answering on their website a series of questions about the 7/7 bombers - questions which had arisen "before, during and after" the fertiliser bomb plot trial.
The ISC had said the details from the fertiliser bomb trial did not mean it should alter its inquiry report of last year, he added.
"I do hope this is a way round it that respects the need of this nation to be protected and the need of all of those who have lost or had family members injured to get answers to their questions," Mr Reid told MPs.
"I do not believe that a public inquiry is the correct response at this time, because it would divert the energies and efforts of so many in the security service and police who are already stretched greatly in countering that present threat.
David Davis: Public has not yet been told "whole truth"
"Our responsibility as a government is to try and minimise the chances of any other group of families ever having to suffer as the families of 7/7 did suffer."
He said he understood the "anguish" of the families of the 7 July victims, but said there had been no new questions raised by the trial, although questions already raised "ought to be answered".
Mr Reid later told BBC News: "Of course, with hindsight, everything is perfect. It's the only exact science known to man."
Prime Minister Tony Blair's spokesman said the foiling of the fertiliser bomb plot represented "a success" which had saved "many lives".
"It is the prevention of a very serious set of attacks," he said.
But he added: "We shouldn't jump from the fact that new evidence has now been made public to the assumption that in some way 7/7 could have been prevented."
However shadow home secretary David Davis said an inquiry into the London bombings was needed.
"Whether deliberately or not, the government have not told the British public the whole truth about the circumstances and mistakes leading up to the July 7 attacks," he said.
"There will never be 100% guarantee against terrorism and we don't expect it. But some mistakes are inevitable and some are not.
"Your web-based response is not the answer. The ISC don't have the investigating capacity to give the answer."
The Liberal Democrats have tabled an urgent question in Parliament, asking for Mr Reid to tell MPs about the 7 July links.
Leader Sir Menzies Campbell said: "The information revealed in this trial will spark widespread public concern and debate about the operational capabilities of the security service, and the reliability of government information in the aftermath of the 7 July bombings."
He "questioned" government briefings in the aftermath of the bombings suggesting that the bombers were "clean skins" - meaning unknown - to security services.
He said: "While the security service has a difficult role to play and cannot be expected to succeed every time, serious questions must be asked about key operational decisions.
"Those questions would be best answered if a full and independent inquiry consisting of privy counsellors were to be established as soon as possible by the government."
David Blunkett, who was home secretary when the London bombers were briefly monitored by the security services, defended MI5's handling of the situation.
He said it was impossible to follow every lead and a public inquiry would not help.
In material placed before the judge at the fertiliser bomb trial, but not shown to the jury for legal reasons, the court heard that the plot's ringleader Omar Khyam had met London bomber Khan four times in early 2004.
MI5 monitored these meetings and followed Khan all the way home to Leeds, secretly photographing him and later learning his surname.
Mr Blunkett cautioned against claims that MI5 could have done more to stop the 2005 bombings.
"The truth was we'd literally doubled the expenditure [for MI5]. We'd expanded rapidly by 50% the ability to actually recruit," Mr Blunkett told the BBC.
"And to switch from the Northern Ireland situation into the new form of counter-terrorism was very difficult. I think the security and intelligence services did everything they could at that time to ensure we were protected."