The Sun newspaper's front page image showed the former Iraqi president in a pair of white underpants.
Other pictures showed Saddam Hussein washing his socks in a bowl, shuffling around and sleeping on his bed.
The US said the photos appeared to breach Geneva Convention rules on the humane treatment of prisoners of war.
"Multinational Forces-Iraq is disappointed at the possibility that someone responsible for the security, welfare, and detention of Saddam would take and provide these photos for public release," a statement from the US-led force said.
"This lapse is being aggressively investigated to determine, if possible, who took the photos, and to ensure existing procedures and directives are complied with to prevent this from happening again."
The Sun refused to say how it got hold of the pictures, or when they were taken, insisting it needed to protect its sources.
It defended its decision to publish them.
It's important that the people of Iraq see him like that to destroy the myth
US military source, quoted by the Sun
"We thought long and hard about publishing, and took the decision that they're such incredible pictures of the world's most brutal dictator... they were a compelling image that any newspaper or broadcaster would publish," the paper's managing editor, Graham Dudman, told the BBC News website.
The Sun cited US military sources saying they handed over the pictures showing Saddam as "an ageing and humble old man" in the hope of dealing a blow to the resistance in Iraq.
"It's important that the people of Iraq see him like that to destroy the myth," the paper said the source said.
Saddam Hussein is awaiting trial on numerous charges in Iraq, including murdering rivals, gassing Iraqi Kurds and using violence to suppress uprisings.
US soldier taking Saddam Hussein from his hiding place in ad-Dawr, 13 December, 2003
Saddam had a beard when he was caught near his hometown of Tikrit
It is not clear when he will go on trial.
The official US military statement said the pictures might be a year old.
They show Saddam with a moustache, rather than the beard he sported when he was captured in December 2003, and again when he appeared in court last July.
The Sun said the former Iraqi leader, 68, was allowed black hair dye to disguise his grey hair.
The paper said Saddam Hussein is kept in a 12ft by 9ft (4m x 3m) cell "somewhere near Baghdad", that he has a desk and a pink plastic chair "which he tends to use as a bedside table".
He is watched round the clock through CCTV cameras, even when he goes to the toilet, the paper said.
The source added that Saddam was one of the best behaved prisoners they had had, it said.