The US Internal Revenue Service has apologised for improperly subjecting conservative political groups to extra scrutiny, a tax official said.
In the 2012 campaign season, groups applying for tax-exempt status with the words "Tea Party" or "patriot" in their names were singled out, the IRS said.
The agency asked some for donor lists, in violation of its own policy.
About 75 organisations were subjected to the additional review but none had their tax-exempt status revoked.
The White House said that if the tax agency had targeted tea party groups, that action would have been inappropriate.
"That was wrong. That was absolutely incorrect, it was insensitive and it was inappropriate. That's not how we go about selecting cases for further review," said Lois Lerner, head of the tax-exempt office for the Internal Revenue Service (IRS), said at a conference organised by the American Bar Association.
"The IRS would like to apologise for that."
The Tea Party is a loosely organised movement of anti-tax conservative activists, and the word "patriot" in US politics has largely come to signify a conservative stance.
Ms Lerner said the practice was started in a branch office in Cincinnati, Ohio and was not motivated by political bias.
Senior officials were not aware of the situation, Ms Lerner told the Associated Press.
But Republican leaders urged the White House to investigate.
"Today's acknowledgement by the Obama administration that the IRS did in fact target conservative groups in the heat of last year's national election is not enough," said Senate Minority Leader Mitch McConnell.
"I call on the White House to conduct a transparent, government-wide review aimed at assuring the American people that these thuggish practices are not under way at the IRS or elsewhere in the administration against anyone, regardless of their political views."
House Majority Leader Eric Cantor said the House of Representatives would investigate the matter.
Conservative activists expressed outrage at the admission.
"I don't think there's any question we were unfairly targeted," said Tom Zawistowski, formerly the president of the Ohio Liberty Coalition, an umbrella group for Tea Party organisations in the state.
Many conservative groups complained during the campaign season about the onerous questionnaires sent by the tax authority.
But top officials denied they were targeting groups based on their political views.
Some tax-exempt organisations are allowed to conduct political activities, but it cannot be their primary mission.
Ms Lerner said the number of such groups filing for tax-exempt status shot up between 2010-12, and the IRS sent all such applications to Cincinnati to streamline its operations.
Staff members were trying to verify the groups were eligible..
The words "Tea Party" and "patriot" were added to a list of red flags without the approval of senior management.
"Mistakes were made initially, but they were in no way due to any political or partisan rationale," the IRS said in a statement, adding it had stopped the practice last year.