The US president said his country's security depended on information obtained from prisoners held there - who include some of those responsible for the September 11 attacks.
"It has been necessary to move these individuals to an environment where they can be held in secret, questioned by experts and, when appropriate, prosecuted for terrorist acts," he said in a speech from the White House.
The CIA prisons have been a source of friction between Washington and other countries, including some allies in Europe.
The administration has also previously come under criticism for its treatment of ''terror'' detainees.
European Union politicians have long accused the CIA of conducting clandestine flights in Europe to take terror suspects to countries where they could face torture.
Manfred Nowak, the UN special investigator on torture, called Bush's acknowledgment of CIA secret prisons "progress," but said their existence was already known.
Nowak said: "We knew there was secret places of detention because we knew there were people who had been arrested and then we lost track of them."
The deputy president of Malaysia's largest opposition party, the Pan-Malaysian Islamic party, also said the acknowledgment of the CIA prisons was not suprising.
Nasharudin Mat Isa said: "To us this is nothing new, Bush's use of military and force to act upon his agenda. This latest boast of his (about CIA secret prisons abroad) will make him even more unpopular among Americans."
He said the transfer of 14 detainees from secret centres to Guantanamo Bay was "an improvement," but warned that "of course there are many others."
However, Alexander Downer, Australia's foreign minister said the CIA's secret imprisonment and interrogation of terror suspects had achieved a great deal for the war on terrorism.
Downer said Australia had benefited directly from the programme, citing the arrests of Khalid Sheikh Mohammed, who was al-Qaida's link to the Southeast Asian terrorist group Jemaah Islamiyah, and that group's operations chief, Indonesian Riduan Isamudin.
Jemaah Islamiyah is blamed for a string of deadly attacks in Indonesia, including the Bali nightclub bombings in 2002 that killed 202 people, including 88 Australians, and an attack on the Australian embassy in Jakarta.
The US military has issued a new directive saying it will treat all prisoners under the rules laid out by the Geneva conventions.
The directive requires that all detainees receive adequate food, water, shelter, clothing and medical treatment.
It protects them from both threats and acts of violence, including rape, assault and theft, as well as "public curiosity".
However, the Pentagon retained the Bush administration's distinction between traditional prisoners of war and "unlawful enemy combatants," who are guaranteed fewer rights.
"This program has helped us to take potential mass murderers off the streets before they have a chance to kill," Bush said. "It is invaluable to America and our allies."
Bush also announced that 14 senior al-Qaeda leaders would be transferred from CIA detention centres to the US military prison camp at Guantanamo Bay.
The 14 prisoners include:
- Khalid Sheik Mohammed, believed to be a senior al-Qaeda leader before he was captured in Pakistan in 2003 and is said to be responsible for the September 11 attacks.
- Ramzi Binalshibh, an alleged would-be September 11 hijacker.
- Abu Zubaydah, who was believed to be a link between Osama bin Laden and many al-Qaeda cells before he was also captured in Pakistan, in March 2002.