Watson was questioned by the House of Lords information committee on 20 May as part of an ongoing inquiry into the way Parliament can improve public understanding of its work through the use of new media.
He told the committee: 'I think we now need to move to a forum of rapid constitutional renewal. The digital age will allow us to do a lot of this.'
Watson added that the events of the past three weeks had 'taken me on a profound journey'.
The minister was embroiled in the expenses scandal when it was reported that he used the parliamentary allowance to furnish a shared London flat with junior housing minister Iain Wright.
The minister also advised the Lords that they should be given a self-publishing platform in order to build their own 'communities of interests', and approved of the idea of ministers holding 'giant chat room conversations' with the public.