Powell also said he hoped a commission investigating the US intelligence on Iraq's alleged weapons of mass destruction would reveal how the CIA ended up depending on unreliable sources for key evidence he used to argue for war.
The acknowledgment about alleged mobile chemical arms laboratories could further hurt the credibility of the Bush administration, also under fire in an election year for failing to stop the September 11 attacks.
The United States justified its preemptive war by accusing Iraq of amassing illegal arms and invaded it last year without explicit UN approval and over the objections of many allies.
In February 2003 Powell made a major presentation of the US case against Iraq at a special session of the UN Security Council where he said the United States had several sources showing mobile chemical weapons laboratories.
But on Friday, the top American diplomat said the evidence on the trailers had been shown to be shaky.
Searches for nuclear weapons in
Iraq have proved fruitless
"Now it appears not to be the case that it was that solid. But at the time I was preparing that presentation it was presented to me as solid," Powell told reporters on a flight home from a trip to Europe.
While doubts about the US sources of evidence for the laboratories have been raised for over a year, Powell's remarks were the most straightforward acknowledgment from the Bush administration that the information was probably wrong.
"That was the most dramatic of them (pieces of evidence) and I made sure it was multi-sourced," he said. "Now if the sources fell apart, then we need to find out how we've gotten ourselves in that position."
"I hope (the commission) will look into these matters to see whether the intelligence agency had a basis for the confidence that they placed in the intelligence at that time," he said.
"Now it appears not to be the case that it was that solid. But at the time I was preparing that presentation it was presented to me as solid ... I'm not the intelligence community"
US Secretary of State
The failure to unearth banned weapons a year after the invasion has fuelled criticism of the Bush administration for misleading the country into a war that caused hundreds of deaths of Iraqi citizens and sparked a deadly insurgency against the American occupation.
Despite being one of the administration's most respected officials, Powell's credibility has suffered because many critics saw him as the mouthpiece for the intelligence community over Iraq.
Powell sought on Friday to distance himself from the evidence he used in his UN presentation. "I'm not the intelligence community," he said.