And, praising Prime Minister Tony Blair, the former SDP leader said his breakaway party had advocated nearly all the policies the government was now pursuing.
"How could I be against New Labour, because after all, it's what the SDP came into existence to create. And in fact the SDP in 1981 actually looked at 'New Labour' as a possible title," he said in an interview with the YouGov website.
New Labour was adopted by Tony Blair during campaigning for the 1997 general election, some 16 years later.
European tradition
Lord Owen told BBC Radio 4's Today programme: "It's true. We looked at 'Radical', 'New Labour Party', 'Democratic Labour'.
"We ended up with Social Democratic Party because that was part of the European continental tradition really."
The party felt it wanted a wide appeal and using the word 'Labour' might deter some people who might consider joining them, such as Liberals and disillusioned Conservatives.
In the early days, three of the Gang of Four - Shirley Williams, Bill Rogers and he - were keen for the party to be a social democratic party, Lord Owen said. They had not planned to join the Liberals at the start.
'Our policies'
Lord Owen said he had always believed the Labour Party could revive but it had taken 15 years to do so.
"They didn't really, in my view, step into being a modern social democratic party until Tony Blair got rid of Clause 4, the old nationalisation issue, inside the constitutional Labour Party."
He told Today: "I think that Tony Blair has done very well with the Labour Party."
And he praised what Labour was doing on the NHS, saying he and Barbara Castle had tried to do that many years earlier.
He told YouGov: "It's pretty obvious there are very substantial chunks of SDP policy - in fact [there's] hardly an innovative policy the New Labour espouse that wasn't advocated by the SDP between 1981 and 1990. I can't think of a single policy that hasn't been espoused by the SDP at one stage."
Lords' reform 'fix'
But he said he was "rather nervous" about Mr Blair's Third Way on economics.
He also criticised the prime minister for failing to introduce an elected House of Lords, branding the current situation "a fix".
He said he would not join Labour now, because he was out of politics and felt it would be better to stay out.
"I'm not very active in politics - the euro is the only issue which really I'm concerned about."
Lord Owen has sat as a cross-bencher in the Lords since leaving the Commons in 1992 and campaigns against the UK joining the European single currency.