Rumsfeld told reporters he was mistaken in the earlier assertion.
"I don't have knowledge as to whether it's been stopped. I do have knowledge it was put under review. I was correctly informed, and I just misstated the facts," Rumsfeld said at a Pentagon news briefing.
Rumsfeld had said in a speech in New York last Friday and in a television interview the same day that the contentious practice had been stopped.
He said Gen. George Casey, the top U.S. commander in Iraq, was reviewing the practice. Casey has said he saw no reason to stop it.
Last week, Rumsfeld all but admitted that the U.S. military is.
Rumsfeld said al Qaeda and other Islamic extremist groups have poisoned the Muslim public's view of the United States through deft use of the Internet and other modern communications methods that the American government has failed to master.
"Our enemies have skillfully adapted to fighting wars in today's media age, but for the most part we, our country, our government, has not adapted," he said.
He quoted Ayman al-Zawahri, the chief lieutenant of al Qaeda leader Osama bin Laden, as saying that their terrorist network is in a media battle for the hearts and minds of Muslims. Rumsfeld agreed, saying that the battle for public opinion is at least as important as the battles on the ground in Iraq and Afghanistan.
On Tuesday, Rumsfeld also spoke about mixed signals coming from Iraqi leaders over the type of government they would like eventually to see take shape in Iraq.
"Iraqis are going through a political process," Rumsfeld said. "Until they agree on who their new leadership should be, you're going to see a lot of public statements by a lot of people ... reflecting a lot of different views."
Iraqi political parties have run into major obstacles in talks on a new national unity government. Any major delay would be a setback to U.S. hopes for a significant reduction in troop levels this year.
British Foreign Secretary Jack Straw said earlier Tuesday in Baghdad that the results of the Dec. 15 parliamentary elections showed the Iraqi people want a "broad government of national unity" to bring together "all the different elements" of Iraqi society.
He spoke after meeting with Prime Minister Ibrahim al-Jaafari and other Iraqi leaders.
Al-Jaafari has said formation of the government was more complicated "because this time the Arab Sunnis are participating in the political process."