The inquiry, chaired by Sir Martin Moore-Bick, is yet to deliver its final report,
Evidence to the inquiry showed official guidance was widely seen to allow highly flammable cladding on tall buildings.
When asked if accepted the rules were wrong Mr Gove replied: “Yes.
“There was a system of regulation that was faulty. The government did not think hard enough, or police effectively enough, the whole system of building safety. Undoubtedly.”
“I believe that (the guidance) was so faulty and ambiguous that it allowed unscrupulous people to exploit a broken system in a way that led to tragedy,” Mr Gove added.
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It comes after the inquiry’s final hearing in November heard that firms appeared to have used the inquiry to “position themselves for any legal proceedings” that may follow it, instead of showing remorse.
In closing submissions, lead counsel Richard Millett KC accused companies of a “merry go round of buck-passing” in order to protect their own interests.
On Monday, the housing secretary will announce a six-week deadline for developers to sign a government contract to fix their unsafe towers – or be banned from the market.
“Those who haven’t (signed) will face consequences. They will not be able to build new homes,” Mr Gove added.
The minister will use the so-called “responsible actor scheme”, to be established in the spring, to block such companies from getting planning or building control approval.
Sky News learnt that major companies including Barratt Developments and Persimmon are preparing for the imminent signing of a legally binding contract with the government that could ultimately cost the industry £5bn or more.
One executive said they expected the final contract to be signed and unveiled as soon as next week, although they cautioned that the timing remained fluid.
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Grenfell: ‘We’ll fight to the end’
Last year, dozens of developers signed a pledge to fix buildings constructed since the early 1990s, with revisions to the deal with government in recent weeks having focused on the scope of companies’ exposure.
The Grenfell inquiry heard many of the companies involved in the tragedy have failed to accept blame for their role in the events prior to the disaster, showing what Mr Millett called a “lack of respect” for the victims and their families.
The inquiry also heard from Jason Beer KC, for the department of levelling up, housing and communities, who said the department “apologises unreservedly” for its failure to recognise weaknesses in the regulatory system.
“The department recognises that it failed to appreciate it held an important stewardship role over the regime and that as a result it failed to grasp the opportunities to assess whether the system was working as intended,” he said.
“For the department’s failure to realise that the regulatory system was broken and that it might lead to a catastrophe such as this, the department is truly sorry and apologises unreservedly.”
Concluding the hearing, inquiry chairman Sir Martin said the panel had already started working on its final report and promised to produce it “as soon as we can”.
Michael Gove will be appearing on the Sophy Ridge on Sunday programme on Sky News from 8.30am this morning.
Conservative Party leader Kemi Badenoch has called on Sir Keir Starmer to sack Treasury minister Tulip Siddiq over allegations she lived in properties linked to allies of her aunt, Sheikh Hasina, the deposed prime minister of Bangladesh.
It comes after the current Bangladeshi leader, Muhammad Yunus, said London properties used by Ms Siddiq should be investigated.
He told the Sunday Timesthe properties should be handed back to his government if they were acquired through “plain robbery”.
Tory leader Ms Badenoch said: “It’s time for Keir Starmer to sack Tulip Siddiq.
“He appointed his personal friend as anti-corruption minister and she is accused herself of corruption.
“Now the government of Bangladesh is raising serious concerns about her links to the regime of Sheikh Hasina.”
Ms Siddiq insists she has “done nothing wrong”.
Her aunt was ousted from office in August following an uprising against her 20-year leadership and fled to India.
On the same day, the prime minister said: “Tulip Siddiq has acted entirely properly by referring herself to the independent adviser, as she’s now done, and that’s why we brought into being the new code.
“It’s to allow ministers to ask the adviser to establish the facts, and yes, I’ve got confidence in her, and that’s the process that will now be happening.”
Police in Aberdeen have widened the search area for two sisters who disappeared four days ago in the city.
Eliza and Henrietta Huszti, both 32, were last seen on CCTV on Market Street after leaving their home on Tuesday at around 2.12am.
The sisters – who are part of a set of triplets and originally from Hungary – crossed the Victoria Bridge to the Torry area and turned right on to a footpath next to the River Dee.
They headed in the direction of Aberdeen Boat Club but officers said there is no evidence to suggest the missing women left the immediate area.
Specialist search teams, police dogs and a marine unit have been trying to trace the pair.
Further searches are being carried out towards the Port of Aberdeen’s South Harbour and Duthie Park.
Police Scotland said it is liaising with authorities in Hungary to support the relatives of the two sisters.
Chief Inspector Darren Bruce said: “Eliza and Henrietta’s family are understandably extremely worried about them and we are working tirelessly to find them.
“We are seriously concerned about them and have significant resources dedicated to the inquiry.”
The sisters, from Aberdeen city centre, are described as slim with long brown hair.
Officers have requested businesses in and around the South Esplanade and Menzies Road area to review their CCTV footage for the early morning of Tuesday 7 January.
Police added they are keen to hear from anyone with dashcam footage from that time.
TV presenter Katie Piper has revealed her decision to get an artificial eye, 16 years after an acid attack that left her with life-changing injuries and partial blindness.
The Loose Women panellist, 41, is an advocate for those with burns and disfigurement injuries.
She shared a video of her being fitted with the prosthetic on Instagram.
Piper said: “After many years battling with my eye health, I’ve reached the end of the road somewhat, and the decision has been made to try a prosthetic eye shell.
“This marks the start of a journey to have an artificial eye, with an incredible medical team behind me.
“As always I’m incredibly grateful to all those in the NHS and private health care system for their talent and kindness.
“I will share my journey, I’m hopeful and nervous about being able to tolerate it and would love to hear from any of you in the comments if you’ve been on this journey or have any advice.”
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Commenting on the post, presenter Lisa Snowdon said Piper was a “warrior” and a “true inspiration”.
Piper has undergone hundreds of operations after suffering an acid attack arranged by her ex-boyfriend in March 2008.
She gave up her right to anonymity and made a documentary in 2009 called Katie: My Beautiful Face.
Piper also founded the Katie Piper Foundation which supports survivors of life-changing burns and scars, and has received an honorary doctorate from the Royal College of Surgeons to mark her ground-breaking work.
She was made an OBE in 2021 for her services to charity and burn victims.