Aid worker Margaret Hassan was killed in Iraq in 2004
The UK government felt "helpless" to deal with the kidnappings of its citizens in Iraq following the war, a senior diplomat has said.
Edward Chaplin, former UK ambassador to Iraq, said the taking hostage and killing of Ken Bigley and Margaret Hassan had been "terrible" events.
But the workload faced by Iraq's first post-war government made it hard to track their whereabouts.
He told the Iraq Inquiry the regime suffered from "dysfunctionality".
Mr Bigley, an engineer, and Mrs Hassan, an aid worker, were killed by their captors in Iraq in late 2004.
Mr Chaplin, who became UK ambassador to the country in July of that year after a 13-year break in diplomatic relations, told the inquiry: "They were terrible incidents. Terrible to the families, but terrible for the embassy, in the sense that we were very helpless.
"Kidnapping was very widespread at the time."
Mr Chaplin said the UK authorities had not known that Mr Bigley was in Iraq, as he had not registered with them.
November-December: Former top civil servants, spy chiefs, diplomats and military commanders to give evidence
January-February 2010: Tony Blair, Gordon Brown and other politicians expected to appear before the panel
March 2010: Inquiry expected to adjourn ahead of the general election campaign
July-August 2010: Inquiry expected to resume
Report set to be published in late 2010 or early 2011
However, he had met Mrs Hassan, he added, saying: "I admired the work that she was doing, so we kept in touch. The embassy kept in touch."
The interim Iraqi government was set up in June 2004 under the leadership of prime minister Iyad Allawi.
Mr Chaplin said: "There was a completely new situation and no-one knew quite what to expect."
But government personnel were chosen "on ethnic and sectarian balance, rather than on competence to deal with the situation".
He added: "The other most striking thing was the sheer lack of capacity... to start the basics of government."
Mr Chaplin said the UK embassy had expected the Allawi regime to face difficulties: "But, even so, the sheer dysfunctionality of the ministerial departments was very striking and it was one area where we gave a lot of our help in the early days."
The Allawi government was in place until Iraq's general elections of January 2005.
Mr Chaplin said: "It was recognised that he was having to deal with a very difficult situation...
"He also showed a lot of personal and political courage in carrying out the job of prime minister."
Mr Chaplin, who left the Iraq job in 2005 and is currently the UK ambassador to Italy, also gave evidence to the inquiry about the build-up to the war last week.
He argued there had been a "dire" lack of planning in Washington for what would happen in the aftermath of the Iraq invasion of 2003.
The US had a "touching faith" that its troops would be welcomed in Iraq and democracy would soon follow, he said.
The Iraq Inquiry is examining UK policy on Iraq between 2001 and 2009.
It is scrutinising the military build-up to the 2003 invasion, looking into when military preparations began in the UK and US and whether they made a diplomatic solution less likely.
In the first few weeks, the inquiry is hearing from senior diplomats and policy advisers who shaped policy in the run-up to the war.
The crucial question of the legality of the war will not be addressed until early next year, when Tony Blair is expected to give evidence.