John Prescott has said he regrets the decision to split up his former "super department", covering environment, transport and local government.
Mr Prescott says he will resign with Tony Blair later this year
A separate environment department was set up in 2001, transport was hived off in 2002 and he was later stripped of local communities.
In a speech to a local government conference, the deputy prime minister defended Labour's record.
But he said public services had had to work in new ways.
"New skills and new approaches were required," the Hull East MP told the annual conference of the New Local Government Network.
"It meant making connections between housing, planning, transport, skills, public services and regeneration in our cities and towns, all within one department - and I regret its break-up."
Mr Prescott, who has said he will stand down as deputy prime minister when Tony Blair resigns this year, also said he was disappointed that plans for an elected regional assembly in the north-east of England had failed.
Voters rejected the plans by 78% to 22% in a 2004 referendum, forcing him to abandon proposals for similar polls elsewhere in northern England.
"I'm sad that regional government was rejected in the North East," he said.
"But I believe that England will eventually move to elected regional government, just as Scotland and Wales originally rejected devolution and then voted for it."
When Labour came to power in 1997, Mr Prescott faced one of the toughest tasks of its first term - getting on top of his super-ministry of transport, environment and the regions.
He oversaw the establishment of regional development agencies and the London mayoralty.
After the 2001 election, he was moved to a less high-profile role in the Cabinet Office, but remained deputy prime minister.
But in 2002, he became head of the first formal Office of the Deputy Prime Minister and regained his local and regional governmental responsibilities.
In the 2005 reshuffle, Mr Prescott lost the communities and local government part of his brief and in the more radical shake-up the following year - after his affair with his secretary was exposed - he lost most of the rest.
Mr Blair's official spokesman said later decisions about departments' responsibilities were always "fine judgments", but in the end the prime minister had to make them.
But shadow local government secretary Caroline Spelman said: "Mr Prescott appears to be having a hard time letting go.
"He achieved little of success whilst he had a department to run, and now that he has been stripped of that, he still seems to unable to give up his dream of regional government."