Hefty pay rise
Wolfowitz personally ordered the hefty pay rises given to his Libyan-born partner, Shaha Riza, according to a Financial Times report published on Thursday.
It cited two people who had seen a memo from Wolfowitz to the head of human resources spelling out the terms of the package.
Wolfowitz said: "This was not in any way to protect personal interests. My real regret was that I didn't more forcefully keep myself out it.
"I take full responsibility for the details of the agreement," he said, after explaining that he had followed advice given by the bank's ethics committee on the employment of Riza.
She was transferred from the World Bank's communications office to the US state department in line with bank regulations to avoid a conflict of interest after Wolfowitz's appointment in mid-2005.
While still on the World Bank payroll, she was rapidly promoted and ended up with a $200,000 package - more than Condoleezza Rice, the US secretary of state.
Wolfowitz acknowledged that the situation surrounding Riza "had the potential to harm this institution" and stressed that he had initially wanted no involvement in her employment terms.
Given his romantic involvement with her, he faced a "painful personal dilemma when I was new to the institution" but had made a "good-faith effort to promote my understanding of that advice" of the ethics committee.
The committee's advice had been to "promote and relocate" Riza out of the World Bank, he said, although that is disputed by some bank staff.