Deputy Prime Minister Nick Clegg appeared to admit that the coalition cut capital spending too deeply when it took power.
Speaking ahead of the release of figures on Friday that are expected to show a fresh contraction in the UK economy, he said ministers had "comforted" themselves at the time that the reduction was in line with plans drawn up by the previous Chancellor, Labour's Alistair Darling.
Mr Clegg said ministers now realised money for infrastructure was needed to foster recovery and the Government must do more to fuel capital investment if Britain does plunge into a triple dip recession.
In an interview with The House magazine, he said: "If I'm going to be sort of self-critical, there was this reduction in capital spending when we came into the Coalition Government.
"I think we comforted ourselves at the time that it was actually no more than what Alistair Darling spelt out anyway, so in a sense everybody was predicting a significant drop off in capital investment.
"But I think we've all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible.
"Wherever we can we've got to mobilise more capital investment. The economic evidence is overwhelming. It helps create jobs now - people go on to construction sites. It raises the productive capacity of the economy in the longer run.
"Money in people's pockets, people on low and middle incomes, and, and mobilise capital investment will always remain my two - I mean, there are plenty of other things: supply-side reforms, making us more competitive and so on, there's fixing the banks, but those two are the ones I always single out."
Experts believe gross domestic product (GDP) will have fallen by 0.1% in the final quarter of 2012, putting the country on course for an unprecedented triple-dip recession.
Asked if the Government should change tack if that becomes a reality, Mr Clegg said: "What kind of things do I think we need to do where we can? I would single out two things.
"Firstly, we need to try, wherever we can, to put money back in the pockets of people on middle and low incomes, because all the evidence is that it is those people that will tend to spend a bit more money on the high street if they feel they've got a few extra pennies in their pockets."
He added: "And secondly, wherever we can we've got to mobilise more capital investment into productive capital because the economic evidence is overwhelming. It helps create jobs now, people go on to construction sites, it raises the productive capacity of the economy in the longer run."
Labour has repeatedly urged the Government to implement a "plan B" for economic recovery based on temporary tax cuts and to bring forward long-term infrastructure investment.
Rachel Reeves, shadow chief secretary to the Treasury, said: "This is the first admission that this Government has made serious mistakes on the economy. But the real question is what Nick Clegg's Government is going to do about it. We have urged ministers to bring forward infrastructure investment and build thousands more homes, but they have refused to listen.
"Nick Clegg also claims he wants to put money into the pockets of people on middle and low incomes. So he should now admit that the VAT rise was a mistake and cancel the plan to cut tax credits for working families on modest incomes on the day millionaires get a tax cut."
Also on HuffPost:
13 Days - Story of the Cuban missile crisis
The American President
Aaron Sorkin's big screen rehearsal for The West Wing.
Steven Spielberg's take on America's most beloved President.
The War Room
Documentary charting the inside track on Bill Clinton's campaign to become the President.
Young Mr Lincoln
Henry Fonda stars in yet another take on Honest Abe.
A campaign with a charismatic frontrunner - what could possibly go wrong?
Sir Anthony Hopkins channels a battered but not broken Richard Nixon at the height of the Watergate troubles.
The British Royal Family must rely on the Blair PR machine to avoid the UK becoming a republic in the wake of Princess Diana's death.
Rugby and freedom from apartheid in South Africa
The Fog of War
Robert McNamara, in his dotage, reflects on what went right and wrong in US politics during the Vietnam war.
Charlie Wilson's War
A drama based on a Texas congressman Charlie Wilson's covert dealings in Afghanistan, where his efforts to assist rebels in their war with the Soviets have some unforeseen and long-reaching effects.
Benedict Cumberbatch, Ion Gruffud star. The idealist William Wilberforce maneuvers his way through Parliament, endeavoring to end the British transatlantic slave trade.
The Ides of March
George Clooney and Ryan Gosling in the tale of a young political activist forced to compromise his ideals as his celebrated candidate proves to have very human foibles.
The Ghost Writer
Ewan McGregor runs into problems when faced with task of ghosting the memoirs of a charismatic US politician (Pierce Brosnan).
The Manchurian Candidate
Both in Frank Sinatra's original or Denzel Washington's remake, this story delves into the brainwashing of captured soldiers for sinister purposes. Chilling.
All The President's Men
Dustin Hoffman, Robert Redford in this tale of the press being the last frontier between politicians and absolute corruption. No wonder Borgen's Katrine has got their poster on her door.
Good Night and Good Luck
Broadcast journalist Edward R. Murrow looks to bring down Senator Joseph McCarthy.
Mr Smith Goes To Washington
A naive man is appointed to fill a vacancy in the US Senate. His plans promptly collide with political corruption, but he doesn't back down. James Stewart - who else?
Two CEOs seize an opportunity to oust long-term congressman Cam Brady (Will Ferrell) by putting up a rival candidate. Their man: naive Marty Huggins (Zach Galifianakis), director of the local Tourism Center.
IMDB: A suicidally disillusioned liberal politician puts a contract out on himself and takes the opportunity to be bluntly honest with his voters by affecting the rhythms and speech of hip-hop music and culture.
Tim Robbins stars. IMDB: A corrupt rightwing folksinger runs a crooked election campaign while only one independent muck-raking reporter is trying to stop him.
... and how tragically it can all end. Oliver Stone's exhaustive theories about what happened in Dallas on 22 November 1963.