Recent court judgements mean there is "inevitably" more risk that suspects under control orders will re-engage in terrorism or abscond, John Reid says.
Mr Reid said control orders were not the 'preferred option'
The home secretary said the government never claimed the control orders system was "completely effective" and said they were not their preferred option.
But, Mr Reid told the Joint Committee on Human Rights, they were the "best available" way to deal with some cases.
Critics say orders, one of which was recently overturned, undermine liberty.
Control orders, introduced in 2005, give ministers the power to put individuals suspected of involvement in terrorism under supervision ranging up to what effectively amounts to house arrest.
They were introduced for cases where someone was believed to be a risk but where there was not sufficient evidence to bring a prosecution in court.
A report by the committee, made up of peers and MPs, said that where they had been imposed there had often been a "lack of effective systems to keep the prospects of prosecution under review".
It looked at the case of a man known as "E", whom the secret services believed was a facilitator and recruiter for an al-Qaeda-linked organisation, the Tunisian Fighting Group.
In February, Mr Justice Beaton at the High Court ruled that a control order against the man - restricting his movements - unlawfully deprived him of liberty, in contravention of Article 5 of the European Convention on Human Rights (ECHR).
Mr Reid told the committee: "The government has never claimed that control orders are completely effective and it remains the case that they are not our preferred option for dealing with suspected terrorists.
"As a result of the successive court judgements, there is inevitably a real and increased risk that individuals on control orders will re-engage or abscond."
He added that the orders struck "the right balance between safeguarding society and safeguarding the rights of the individual".
They were "proportional" for dealing with some cases, Mr Reid said.
The Court of Appeal reversed the High Court decision over E last week, after Mr Reid had given his views to the committee, which have been published in report form.
The case is now likely to be settled in the House of Lords.
Now the order has been restored, E is required to stay at an address between the hours of 0700 and 1900.
He is not allowed to see unauthorised visitors at the address, have a mobile phone or use the internet.
The committee also questioned the use of control orders after the Home Office said the three people under control orders who absconded were not a threat to the public.
Mr Reid, in his letter to the committee sent on 1 May, explained that some control orders were in place to "reduce the risk of an individual going abroad to engage in terrorism-related activities" rather than being a threat to the public in the UK.