He said the inspections would be a first step, but that the US also needed to present evidence of its suspicions about Iraq to the international community, so that an informed judgement could be made about possible military action.
Mr Powell's comments seem to contradict US Vice-President Dick Cheney who said last week that there was no point sending weapons inspectors back into Iraq - and argued forcefully for military action.
Meanwhile, Iraq announced it was sending envoys to European Union member-states to try to rally opposition to possible military action.
Iraqi Vice-President Taha Yassin Ramadan praised the EU for refusing to follow America's stance.
In recent weeks the EU, along with many other countries, has made it clear it wants differences with Iraq to be resolved through diplomacy rather than war.
Contradictions?
Mr Powell told the BBC on Sunday that President Bush wants the UN inspectors, who left Iraq four years ago, to go back in before any decision is taken on a military strike.
The US secretary of State is a lone moderate voice in a government dominated by hawks, correspondents say.
But more and more US allies - in Europe, the Middle East and elsewhere - are expressing concern over possible strike on Iraq.
Joining those urging caution, former Saudi oil minister Sheikh Yamani told the BBC's Talking Point programme on Sunday that the US would be "playing with fire" if it attacked Iraq.
He warned President Bush that there could be a big jump in the price of oil and a collapse in the world economy if there was a sizable disruption in oil supplies.
Also on Sunday, in an interview with CNN, Iraqi Deputy Prime Minister Tareq Aziz dismissed accusations that Iraq was working to produce nuclear weapons.
"That's not true. We are ready to prove it by technical, viable means," he said.
Allowing weapons inspectors back into Iraq was not an option, he said.
"It's a non-starter because it's not going to bring about a conclusion."
Rallying support
Iraq's strategy at the moment is to try to rally as much support as it can from as many areas as possible, says BBC correspondent Heba Saleh.
The Iraqi vice-president says the envoys he is sending to Europe will explain, as he put it, how America is threatening world peace and security.
Baghdad can see that Europe is alarmed by America's tough talk of a military campaign and Iraqi officials are aiming to widen the gap developing between the Europeans and the Americans, our correspondent says.
In his speech on Sunday, Mr Ramadan made no mention of UN weapons inspections resuming, despite a call by EU ministers the day before.
However analysts points out that Baghdad is probably saving the return of the inspectors as a last card to play, if it became clear that war was imminent.
Arab meeting
Iraq is also courting countries outside Europe in its search for support.
The Iraqi government has said a member of the Saudi royal family is due to visit Baghdad on Monday for what would be the first such visit since the Gulf War of 1991.
Further afield, on a recent trip to China, the Iraqi foreign minister secured Chinese opposition to a US strike.