Panetta and Joint Chiefs of Staff Chairman Gen. Martin Dempsey told the Senate Armed Services Committee they both supported the proposal brought to Obama last summer, but they were rebuffed.
The plan, developed by David Petraeus, CIA director at the time, was also backed by Hillary Clinton, then secretary of state, Panetta and Dempsey said in the first public revelation of a rift in the administration on this critical foreign policy issue.
The disclosure came when Sen. John McCain, R-Ariz., asked Panetta and Dempsey if the Pentagon supported the recommendation by Clinton and Petraeus "that we provide weapons to the resistance in Syria -- did you support that?"
"We did," Panetta said.
"You did support that," McCain said.
"We did," Dempsey said.
Panetta and Dempsey didn't say why Obama did not follow their recommendation.
Panetta said he now accepts the decision not to act on the proposal.
"Obviously there were a number of factors that were involved here that ultimately led to the president's decision to make it non-lethal," Panetta said.
U.S. officials told The Wall Street Journal the White House shelved the idea because of lingering questions about which rebels could be trusted with the arms.
They said Obama also questioned if arming the rebels would really help remove Syrian President Bashar Assad. Obama also wondered if the weapons would add to civilian suffering, the officials said.
A U.S. official told the Journal a CIA team of analysts had cast doubt on the benefits of arming the rebels.
Obama was in the middle of his re-election campaign at the time.
Some administration officials expected the issue to be re-examined after the election. But when Petraeus resigned because of an extramarital affair and Clinton suffered a concussion, missing weeks of work, the issue was removed from consideration, The New York Times said.
The plan, first reported by the Times Saturday, called for the United States to vet the rebel groups and train fighters supplied with weapons, with the help of a neighboring state.
The risky plan offered the potential reward of creating Syrian allies the United States could work with during the conflict and after Assad's eventual removal, the Times said.
A White House spokesman declined to comment.