A public inquiry into the 7 July bombings is not necessary and could divert resources from security, Home Secretary John Reid has said.
Tavistock Square was the site of one of the bomb attacks
Mr Reid told MPs he would invite bereaved families of the 52 victims to meetings so he could explain to them personally his reasoning.
The Conservatives say there should be a full independent inquiry, while the Lib Dems want a full public inquiry.
The government's decision has angered many survivors and victims' families.
Nader Mozakka, 50, whose wife Behnaz, 47, was killed in the Russell Square explosion, accused the government of acting as "judge and jury" on a public inquiry.
"Most families, as far as I'm aware, have been calling for a public inquiry," he said.
The Home Office's "narrative" of events was published on Thursday along with a report from Parliament's Intelligence and Security Committee (ISC) - which reports directly to the prime minister rather than MPs.
The MPs concluded that a lack of resources had prevented security services from intercepting the 7 July bombers, who killed 52 people in attacks on three Tube trains and a bus.
There have been complaints that not enough has been done to compensate victims' families and Mr Reid hinted he was thinking about giving them more help.
Mr Reid said he was rethinking the current criminal injuries compensation scheme.
Under the proposals, people who suffer minor injuries will no longer be eligible for payments, with the money saved going towards those who are more seriously hurt.
David Davis wants a new counter-terrorism minister
Mr Reid said such changes would not normally apply retrospectively.
"The events of 7 July were an exceptional case that has to be treated exceptionally," he said, suggesting he would be able to say more shortly.
Mr Reid said there was no evidence the Iraq war had been a factor in driving the bombers.
"Their motivation appears to have been a mixture of anger at perceived injustices by the West against Muslims and a desire for martyrdom," he said.
The key lesson from the bombings was that a "collective" strategy was needed to fight terrorism, involving police, government, faith groups and local communities, said Mr Reid.
"The willingness of these men to use suicide bombing as their method and to attack vulnerable, civilian targets ... made them doubly difficult to defend against," he said.
The ISC report said a lack of resources prevented security services from intercepting the bombers.
Mr Reid said the government had "substantially increased" resources and the security service was expanding as fast as chiefs believed "organisationally possible".
For the Tories, shadow home secretary David Davis said an independent inquiry, properly resourced and with access to all data, was still needed.
He said the reports left "too many questions unresolved".
Examples included the extent of any link between the bombers and al-Qaeda.
He asked how the government could represent the four as an independent freelance group given that two of the men - Mohammed Sidique Khan and Shehzad Tanweer - had met al-Qaeda leaders and discussed jihad with them.
He also asked "how did al-Qaeda get a copy of Khan's suicide video so they could splice on to it their own propaganda... before it was broadcast in September?"
Mr Davis earlier said that in the wake of the 11 September 2001 attacks there had been a raft of legislation passed.
But he argued that not enough resources had been made available for the three following years.
Responding to the questions, Mr Reid said the extent of al-Qaeda involvement remained unclear.
He said the intelligence agencies had come across Tanweer and Khan on the peripheries of another investigation.
"There was no intelligence at the time that they were interested in planning an attack on the United Kingdom," he said.
The Conservatives are also renewing calls for a minister with specific responsibility for counter terrorism.
Mr Davis said fighting terrorism was currently a part-time job for the home secretary and for the foreign secretary.
The Lib Dems questioned whether the two reports would restore public confidence in the UK security services, given the narrowness of their remits.
Home affairs spokesman Nick Clegg said: "A public inquiry, which can enhance public understanding of the nature of the new terrorist threat in Britain and assist in targeting intelligence recourses in our own communities, is still required."
Mr Reid responded to that call by saying: "It would mean a pretty massive reallocation of resources ... away from those needing protection at a critical time."