Philip Hammond made his case after Sky News revealed the government was mothballing the team of civil servants responsible for no-deal planning.
Over the past two years, the government had moved thousands of civil servants away from their normal jobs to prepare for the possibility that the UK would leave the European Union without a deal.
Mr Hammond told Sky News: “It would have been irresponsible not to prepare for no deal, so long as it was a real possible outcome.
“Making preparations for events that we hope will not happen is an everyday part of government.
“Just to be clear about this – we spent £4bn so far on preparing for Brexit, but that is not just for a no-deal Brexit – much of that money would need to be spent anyway, putting in place systems to replace EU systems that we’ve been using up to now.”
Sky News understands the civil servants will be gradually returned to their home departments after the Easter break but those working on no-deal contingencies were told to leave their work in good order should it need to be resumed.
Mr Hammond was speaking in Washington DC where he is attending meetings at the International Monetary Fund (IMF).
His words came after the UK was given until 31 October to leave the European Union, a deadline that had previously been tonight.
But Mr Hammond refused to rule out the possibility that the UK will face the same risk of leaving without a deal when the October deadline arrives.
He said: “Unfortunately parliament’s clarity on that issue has not been matched by clarity about what kind of deal we should have in order to ensure that we don’t have no deal.
“What we’ve got to do now, through the discussions we are having with the Labour Party, is find a way forward that allows us to find a deal that works for Britain, allows us to deliver Brexit, and allows us to protect the economy and British jobs.”
Yesterday the IMF’s managing director Christine Lagarde said the the delay to Brexit had helped avoid a “terrible outcome” that would have snowballed across an already fragile global economy.
Ms Lagarde told a news conference: “It gives time for continued discussions between the various parties involved in the UK.”