MI5 now faces a House of Commons inquiry after it was confirmed the two terror suspects arrested over his murder were known to the national security agency.
But Communities Secretary Eric Pickles said it was impossible to control everyone all the time.
"Peers and MPs will do a thorough investigation in terms of what the security forces knew but I've seen experts on security explaining how difficult it is in a free society to be able to control everyone," Pickles was quoted as saying by the BBC.
Both Londoners of Nigerian descent were caught on camera-phones and have been identified as 28-year-old Michael Adebolajo and 22-year-old Michael Adebowale.
Adebolajo, from a Nigerian churchgoing family who converted to Islam after college, had complained of harassment by MI5 in the last three years after he came to the intelligence agency's attention.
He assumed a Muslim name of Mujahid, which means one who engages in jihad, and began attending demonstrations of the now-banned Islamist group Al Muhajiroun in the UK.
Holding a knife and machete in his bloodstained hands, he said, "We swear by almighty Allah we will never stop fighting you. We must fight them as they fight us. An eye for an eye, a tooth for a tooth."
Whitehall sources did not deny reports that one of the suspects was stopped while trying to travel to the war-torn east African country of Somalia, feared by counter-terrorism officials to be a training ground for violent jihadists.
Detectives investigating Rigby's death also arrested a 29-year-old man and woman on suspicion of conspiracy to murder the soldier, suggesting there may have been a wider plot to carry out the attack.
It is understood that a flat in Greenwich raided by police was occupied by the girlfriend of Michael Adebowale.
British Prime Minister David Cameron had said yesterday that Parliament's intelligence and security committee would examine the wider role of the police and MI5, an inquiry that is expected to address any lessons that may need to be learned after counter-terrorism officials decided not to monitor the suspects.
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