The spokesman refused to be drawn on allegations that US troops had used the incendiary weapon against civilians during the battle of Falluja last November.
"Use of phosphorus by the US is a matter for the US," he said on Wednesday, briefing political reporters on customary condition that his name is not published.
"British forces possess white phosphorus but it is used for producing smoke."
White phosphorus, in a form used by the military, ignites when it is exposed to oxygen, producing such heat that it bursts into a yellow flame and produces a dense white smoke.
It is used to lay a smoke screen to mask troop movements and to light up a battlefield. But it can cause painful burn injuries to exposed human flesh.
The battle for Falluja was the most intense and deadly fight of the war, after the fall of Baghdad in April 2003.
Despite initial denials, Pentagon officials acknowledged on Tuesday that US troops had used the substance as an incendiary weapon against enemy strongholds there.
Use of white phosphorus is not banned, but it is covered by Protocol III of the 1980 Convention on Conventional Weapons.
The protocol prohibits use of the substance as an incendiary weapon against civilian populations and in air attacks against military forces in civilian areas.
"British forces possess white phosphorus but it is used for producing smoke"
Spokesman for Prime Minister Tony Blair
Blair's spokesman pointed out that Britain is a signatory to the convention. The US is not.
Britain's Liberal Democrat Party, which opposed the Iraq war, said Washington risked handing the anti-US forces in Iraq a propaganda victory by using the substance as an incendiary weapon.
"A vital part of the effort in Iraq is to win the battle for hearts and minds," said the party's foreign affairs spokesman Menzies Campbell.
"The use of this weapon may technically have been legal, but its effects are such that it will hand a propaganda victory to the insurgency."