Speaking to a global online audience from BBC Television Centre, as part of Coventry University 'Is World Journalism in Crisis?' event, Paxman admitted he had made the wrong judgement call over evidence presented by Colin Powell in 2003, then US secretary of state.
"As far as I personally was concerned, there a came a point with the presentation of the so-called evidence, with the moment when Colin Powell sat down at the UN General Assembly and unveiled what he said was cast-iron evidence of things like mobile, biological, weapon facilities and the like," he said.
"When I saw all of that, I said 'we know that Colin Powell is an intelligent thoughtful man, and a sceptical man. If he believes this to be the case; he's seen the evidence, I haven't.
"Now that evidence turned out to be absolutely meaningless but we only discover that after the event. So I am perfectly open to the accusation that we were hoodwinked. Clearly we were."
Addressing another question, Paxman pleaded journalists to 'cast a sceptical eye on what people with powerful vested interests tell them'.
So why had Paxman trusted Powell, if he urged journalists to be distrusting, asked Professor Richard Keeble, professor of journalism at Lincoln University. "Necessarily a source is someone you do trust," answered Paxman. "In the end, you've got to make a judgement."
The WMD episode would make him less trusting of the American Department of State in the CIA in future, he said:
"Next time I see a presentation from the American state department or the CIA about, I don't know, Iran's nuclear weapons programme, I shall look at it differently to the way I looked upon their presentation on the so-called presence of Weapons of Mass Destruction in Iraq.
"But at the time I did not have independent evidence, one merely had the assertion of a murderous dictator on one hand, and what appeared to be covertly gathered intelligence on the other.
"I and many others judged that wrong and we believed it - and clearly it didn't stack up in the events."