The country said yesterday it lacked the means not the will to clean up its role in the industry.
A report to the UN Security Council said this week that the West African state, whose wars between 1989 and 2003 were partly fuelled by fighting over diamonds, had shown limited commitment to regulate the trade, known as the Kimberley Process.
"We are constrained by a capacity problem. That we accept. [But] the government does not lack the will," Betty Blamo, acting minister of lands and mines, said. "We do recognise that we do have challenges and we are putting into place measures to resolve some of these challenges. But it is unfair to say that we have not done anything in that area."
Mrs Blamo blamed the lack of financial resources in Liberia, which has attracted international mining and oil investors but is still rebuilding after 14 years of near-constant conflict that killed hundreds of thousands of people.
Blood diamonds, diamonds used to fund insurgencies, were thrust into the spotlight in the 1990s during a series of African conflicts where their trade financed arms purchases and resulted in human rights abuses.
The Kimberley Process was launched in 2003 with the aim of certifying stones and preventing blood or conflict diamonds entering the international market.
Mrs Blamo said Liberia's steps to be part of the global Kimberly Process, that aims to regulate the $30 billion rough-diamond industry, included dispatching inspectors to monitor the trade in mining areas.
The UN report said government bodies due to oversee the Kimberly Process were meeting infrequently and said the US had said it might stop funding a programme to help the Liberian Government improve compliance.