The Pentagon defends the move as part of an effort aimed at "getting the truth out" there.
But facing critics in the United States - including lawmakers from both parties - the military raised the possibility of making changes in the programme.
Lieutenant Colonel Barry Johnson, a military spokesman in Iraq, said on Friday that "if any part of our process does not have our full confidence, we will examine that activity and take appropriate action."
He did not specify what changes, if any, might be considered.
The remarks came after days of reports and criticism that the military was covertly planting in the Iraqi media stories that gave a slanted, positive view of conditions in Iraq.
US military officials in Iraq said articles had been offered and published in Iraqi newspapers "as a function of buying advertising and opinion/editorial space, as is customary in Iraq".
The practice has been widely criticised as a blow to US credibility and to the independence of the Iraqi media.
Senator John Warner, after being briefed by defence officials, said the Pentagon was still gathering information on the extent of the secret programme, and whether Iraqi journalists were paid by the military to write favourable stories.
Rumsfeld is reported to have
taken an interest in the matter
Senior Pentagon officials confirmed that a private firm, the Lincoln Group, was contracted to pay Iraqi news organisations to run military-produced stories as paid advertisements, he said.
"Now it's been discovered in some areas there's an omission of that reference that it's been paid for. And they're looking into that," Warner told reporters.
He said the stories were put together by a group working directly under Lieutenant General John Vines, the second-ranking commander in Iraq.
They were reviewed by a flag officer and cleared by military legal advisers before being turned over to the Lincoln Group, a public relations firm in Washington, he said.
He said the material produced by the military was represented as originating with the coalition military.
"Lincoln Group is authorised to provide payment for placement of this material in Iraqi newspapers, similar to the way in which any advertiser, marketer or public relations firm would place advertisements," Warner said.
"Lincoln Group is authorised to provide payment for placement of this material in Iraqi newspapers, similar to the way in which any advertiser, marketer or public relations firm would place advertisements"
Senator John Warner
The Los Angeles Times reported last week that Lincoln Group staff in Iraq sometimes posed as freelance journalists or advertising executives when delivering stories to Iraqi news outlets, masking their connection to the military.
It said dozens of stories written by military "information operations" soldiers ran in Iraqi newspapers, many of them presented as unbiased news accounts by independent reporters.
Iraqi reporters paid
Knight-Ridder newspapers reported that the military had also paid Iraqi journalists to write favourable stories, making payments of up to $200 a month to members of a military-organised Baghdad Press Club.
"We can't verify this question of payments to the journalists," Warner said, adding that he remained "gravely concerned" about the reports.
The military aimed at giving a
positive view of the Iraq war
The senator refrained from further comment until the military provided a fuller account, which he said the command in Baghdad was preparing.
The Lincoln Group has remained silent on whether it has paid Iraqi news organisations to run stories without identifying them as produced by the military.
In a statement on Friday, it said it "has consistently worked with the Iraqi media to promote truthful reporting across Iraq".
It said: "We counter the lies, intimidation and pure evil of terror with factual stories that highlight the heroism and sacrifice of the Iraqi people and their struggle for freedom and security."
Bryan Whitman, a Pentagon spokesman, said Donald Rumsfeld, the defence secretary "has taken an interest in this matter" but would not comment on what he had done.