Several countries have banned Japanese beef exports
Bad communication and "confused responses" by officials had damaged public confidence in his government, Mr Koizumi told parliament.
The Agriculture Minister, Tsutomu Takebe, has apologised to parliament, admitting that his ministry's response was grossly insufficient.
It has emerged that a dairy cow which was suspected of having BSE (bovine spongiform encephalopathy), was destroyed and processed into meat-and-bone meal.
Infected feed is believed to have caused the spread of the disease in Europe, where about 100 people have died from its human variant, CJD (Creutzfeldt-Jakob disease).
A tissue sample from the destroyed cow was sent to the UK and tested positive.
'Regrettable'
Since the government announced three weeks ago that it had discovered a dairy cow suspected of having the brain-wasting disease in Chiba, near Tokyo, the authorities have been inspecting all of Japan's 4.5 million cows.
Speaking before parliament on Tuesday, Mr Koizumi said: "It is truly regrettable that instances of insufficient communication and confused responses by officials have invited distrust in this country's administration."
Days after the cow was destroyed last month, agriculture officials admitted it had been processed into meat-and-bone meal, blaming "miscommunication" with local authorities.
On Monday Japan banned the distribution of cattle feed made from animal products but consumer groups said it was too late.
Beef dinner
On Tuesday evening Mr Koizumi pulled out of the launch of a beef-eating campaign to convince consumers that home-bred beef was safe, citing an engagement with visiting South African President Thabo Mbeki.
At the launch, ruling party MPs including the health and agriculture ministers tucked into plates of beef and drank milk but consumer groups dismissed the event as a meaningless stunt.
All the beef had been tested and cleared of mad cow disease before the meal, said event sponsor Naoto Kitamura, a member of parliament from Hokkaido.
"This kind of performance is laughable," said Hiroko Mizuhara, secretary-general of the Consumers' Union of Japan. "They are mocking consumers."