The atheist and former spin doctor for Tony Blair laughed the comment off during a debate about faith with TV chef and committed Catholic Delia Smith in central London last night.
Asked why he had made the comment and what he meant by it, Campbell explained that he had made the interjection when an interview between Blair and a journalist had gone on too long.
When the journalist asked his "eleventh 'one more question'" to discuss about Blair's faith, Campbell said he "stepped in and said 'I'm sorry, we don't do God'".
"The 'we don't do God' thing … it's the most ridiculous story," Campbell said.
He defended the sentiment, however, saying that whereas in the US, faith is a part of the political space, it could be "messy" for a politician in the British system to do the same.
"I still think that for a British politician, there is a risk", he said.
Campbell shared his respect for Blair as a man of faith but joked that it had been a "bloody nightmare" trying to find a church everywhere they went because the then Prime Minister had wanted to attend Mass.
Campbell appeared sympathetic towards Christians, however, saying he got the impression they were feeling "beleaguered" because of "all the Dawkins and anti-Godism stuff around".
He described himself as a "pro-faith atheist", saying that while he did not believe in God, he did not disrespect people who did.
"I'm not one of those militant atheists, I don't like that," he said.
Picking up the theme again later, he said: "Life is about believing. It's about believing and then doing things with your beliefs.
"I have huge respect for people who have faith … I like what it does for them."
He admitted there was a negative side, when beliefs are misinterpreted or misrepresented, saying this could be seen in the Middle East today.
"But I think a lot of people who have faith, it's a force for good," he added.
Smith agreed with Campbell that Christians were "beleaguered" and said it would be "very, very sad" if children were not taught in schools about the Christian faith.
Asked about whether women should be bishops in light of the controversy surrounding the Church of England, Smith said it was "madness" for women to be priests but not bishops.
"Unfortunately churches drag their feet a bit. Obviously you've got to have women priests and if you have women priests then you have got to have women bishops … and the Catholic Church has never come up with anything saying why you can't."
She quipped: "If I'd been pope, it would have all been different."