McCain, speaking to The Associated Press in an hourlong interview, said his comments are not a call for Rumsfeld's resignation, explaining that President Bush "can have the team that he wants around him."
Asked about his confidence in the secretary's leadership, McCain recalled fielding a similar question a couple weeks ago.
"I said no. My answer is still no. No confidence," McCain said.
He estimated an additional 80,000 Army personnel and 20,000 to 30,000 more Marines would be needed to secure Iraq.
"I have strenuously argued for larger troop numbers in Iraq, including the right kind of troops - linguists, special forces, civil affairs, etc.," said McCain, R-Ariz. "There are very strong differences of opinion between myself and Secretary Rumsfeld on that issue."
When asked if Rumsfeld was a liability to the Bush administration, McCain responded: "The president can decide that, not me."
McCain, a decorated Navy veteran and former Vietnam prisoner of war, is a senior member of the Senate Armed Services Committee, which has oversight of military operations and considerable influence over the Pentagon budget.
If Senate Republicans maintain their majority two years from now, McCain would be in line to become the committee's chairman, something he said he'd weigh when considering whether to run for president again.
"In a couple of years I might give it some consideration, but not right now," he said of a 2008 presidential bid.
Pentagon spokesman Larry Di Rita said McCain "has frequently expressed his views regarding troop levels in Iraq, and he is an important member" of the committee.
Rumsfeld has "relied upon the judgment of the military commanders to determine what force levels are appropriate for the situation at hand," Di Rita said.
Despite the troop levels, McCain believes military morale remains high, but he acknowledged that involuntary extensions of tours of duty were frustrating to soldiers.
He said Iraq must have a functioning independent government before U.S. troops leave.
"I believe we'll be in Iraq militarily for many years, which would not be a problem to the American people," he said. "I think what is not acceptable to the American people is an increasing flow of dead and wounded."
By Beth DeFalco