The Coast Guard said it would review how its exercise led to TV news reports that were "based on overheard radio calls made over a training frequency" normally used only by the Coast Guard.
The Coast Guard said such exercises go on every day in and around U.S. ports, and the Secret Service is not normally notified.
Erroneous live cable news reports on CNN and Fox had said that the Coast Guard was firing shots on the river. CNN reported the Coast Guard had fired 10 rounds at a suspicious boat, and showed vessels circling in the water - near the bridge President Barack Obama's motorcade crossed on the way to a memorial at the Pentagon earlier Friday morning.
The president was not in the area when the training exercise took place, Coast Guard Chief of Staff John Currier said at a news conference.
Currier said as part of its exercise, the Coast Guard aired simulated instructions to participants to fire 10 rounds and someone said "bang, bang, bang" to simulate compliance.
The White House defended the Coast Guard's decision to hold the exercise in the Potomac on the Sept. 11 anniversary. Spokesman Robert Gibbs said if law enforcement felt there was a need for the exercise, it's "best not to second-guess."
Gibbs said he didn't believe the White House was notified about the exercise. He sharply criticized CNN for airing the inaccurate report that shots were fired.
"Before we report things like this, checking would be good," Gibbs said.
The Associated Press reported that an exercise was under way in the river and did not report that shots were fired.
More than an hour after its first reports, CNN anchor Kyra Phillips said on the air that CNN's initial report stemmed from someone saying "bang, bang, bang" over a radio frequency monitored by the network's police scanner.
"We did call the Coast Guard, and the Coast Guard said, 'We don't know what you're talking about,"' she said. CNN went ahead with the story based on a reporter's other sources, Phillips said.
"We're still trying to hammer this out, but we did what we were supposed to do, according to our folks in Washington," Phillips said.
CNN spokeswoman Edie Emergy did not immediately respond to requests for comment.
A group for military families expressed outrage that the Coast Guard exercise was held near the Pentagon at the same time families of those who died during the Sept. 11 attacks had gathered there for a memorial.
"September 11th is a day to remember the loss of 2,973 innocent victims in New York, Pennsylvania and the Pentagon; not a day to create an unnecessary panic near a terrorist's target," Military Families United said in a statement.
Departures from Reagan National Airport were halted as a precaution at 10:08 a.m., then resumed at 10:30 a.m., Federal Aviation Administration spokeswoman Diane Spitaliere said. The airport borders the Potomac.
A law enforcement official, speaking on condition of anonymity, said federal agents scrambled to the river scene after the initial media reports, because the local FBI office had not been told ahead of time about the Coast Guard exercise. The official spoke on condition of anonymity because the official was not authorized to discuss the incident.
The confusion was reminiscent of an event earlier this year in New York, when a presidential plane was flown low over the city for a photo shoot and some people feared the city was under attack.
In late April, a huge presidential passenger jet and two F-16 fighter planes whizzed past the Statue of Liberty and the lower Manhattan financial district as part of a photo shoot, sending panicked office workers streaming into the streets and evoking memories of 9/11.
After that incident, Obama said it was a mistake and promised it would not happen again. The director of the White House's military office resigned after the incident.
The Coast Guard is part of the Homeland Security Department, which was created in response to the 9/11 attacks. The massive reorganization was designed to promote sharing of information within the department and among other law enforcement agencies.
Associated Press writers Devlin Barrett and Joan Lowy contributed to this report.