Dozens of clubs have gone into administration in recent years because of cash-flow problems and unpaid debts, including the most high-profile casualty so far, Portsmouth, the first Premier League club to call in the accountants.
Football governance must be dragged into the 21st century, and cannot be exempt from measures introduced in other parts of society and business, Hugh Robertson said in a Reuters interview ahead of this week's general election.
"Football clubs will always go bust," he said. "I'm afraid sadly from time to time this will happen, but I am just not convinced at the moment that the regulatory regime around football is as tough as it should be to prevent it happening."
He wants the game's three powers, the Premier League, Football Association and Football League, to tackle the issue by tightening the 'fit and proper person' test for club owners.
The game's bodies have been given until the end of the summer to come up with their own ideas. Failure to do so will mean the government will "have to intervene".
"I am not entirely decided yet whether that would be by means of primary legislation...or whether simply we set up and put an independent football regulator into motion, which you could do much more quickly," he said.
The ruling Labour party prefers to focus on making it easier for supporters' groups to buy stakes in football teams and allowing greater scrutiny of club takeovers.
Attempts at stricter self-regulation were dealt a blow in March when the FA's Chief Executive Ian Watmore suddenly resigned at a time when he was believed to be to close to delivering reform ideas.
His departure showed something was "badly wrong" with the structure of English football, Robertson said.
"I have been very closely involved in the delivery of the Olympics from the word go," Robertson said. "And of course we are already, as a party, quite wrapped up in it."
