While on a three-day visit to Washington, she said the system was a “complete merry-go-round” with a “whole industry” devoted to defending the rights of individuals intent on causing harm.
Emad Al Swealmeen, 32, was an asylum seeker who arrived in the UK at least seven years ago.
The 32-year-old died in the blast in a taxi outside Liverpool Women’s Hospital shortly before 11am on Remembrance Sunday.
The incident has been declared a terrorist attack and the UK terror threat level has since been raised from substantial to severe, meaning an attack is “highly likely” rather than “likely”.
According to newspaper reports, Ms Patel told reporters on her flight to the US capital that the case showed why the government was right to reform the asylum system.
“The case in Liverpool was a complete reflection of how dysfunctional, how broken, the system has been in the past, and why I want to bring changes forward,” she was quoted as saying."
CCTV from outside a Liverpool hospital shows the moment an explosion ripped through a taxi
She continued: “It’s a complete merry-go-round and it has been exploited. A whole sort of professional legal services industry has based itself on rights of appeal, going to the courts day-in day-out at the expense of the taxpayers through legal aid. That is effectively what we need to change.”
She added: “These people have come to our country and abused British values, abused the values of the fabric of our country and our society.
“And as a result of that, there’s a whole industry that thinks it’s right to defend these individuals that cause the most appalling crimes against British citizens, devastating their lives, blighting communities — and that is completely wrong.”
Al Swealmeen was a Christian convert and the reports said there was growing concern within the Home Office at the role on the Church of England in converting asylum seekers.
He lived with a Christian couple after he converted in 2017 - they told ITV News he had previously struggled with his mental health, but they had no doubt of his faith.
Malcolm and Elizabeth Hitchcott said they had been contacted by Al Swealmeen in 2017 when he was “desperate” for somewhere to stay.
Mr Hitchcott told ITV News "he was a very quiet fellow" who converted to Christianity and was baptised and confirmed in Liverpool cathedral, having become disillusioned with Islam.
The couple said Al Swealmeen was “sold out on Jesus” and was a diligent Bible student who helped with housework.
"I mean he lived here for eight months, and we were living cheek by jowl. There was never any suggestion of anything amiss," he told ITV News.
"I feel shocked at the moment - I don't know how I will feel tomorrow".
ITV News speak to a Christian couple who lived with Al Swealmeen
Assistant Chief Constable Russ Jackson, from Counter-Terrorism Police North West, previously told journalists the explosive device had been “manufactured” and the force’s assumption was that it was built by Al Swealmeen.
The inquiry is examining, among other possibilities, whether the main charge on the device failed to explode and if the homemade explosive TATP was used.
Searches have been carried out at an address in Rutland Avenue, where detectives said Al Swealmeen was picked up by the taxi, and at a second property in Sutcliffe Street, where officers believe he previously lived.
Four men arrested under terrorism laws in the Kensington area of Liverpool – three aged 21, 26 and 29, who were held on Sunday, and a man aged 20 who was detained on Monday – have now been released from police custody following interviews.
Police continued to appeal for any information about the incident or the suspected attacker.