Capel Celyn was flooded 50 years ago to create the Tryweryn reservoir.
Wales Office Minister Alun Cairns said it marked "some of the darkest and some of the most regrettable days in modern Welsh history".
Plaid Cymru MP Liz Saville Roberts warned another Tryweryn could happen unless Wales got control of its water.
Leading a Westminster debate, the Dwyfor Meirionnydd MP expressed concerns that the UK government still had ultimate control of Wales' natural resources.
She highlighted a clause in the law which gives the Welsh secretary the right to intervene in any assembly legislation which could have a "serious adverse impact" on water supplies in England.
Responding to the debate, Mr Cairns quoted the slogan on a wall near Aberystwyth.
"Let me say from the outset that the whole situation was a shameful chapter in Welsh history and should not be forgotten.
"In fact the words 'Cofiwch Dryweryn' - remember Treweryn - painted on the wall in Llanrhystud, outside Aberystwyth, are instantly recognisable by people across Wales as they travel from north to south.
"But those words remind us all about some of the darkest and some of the most regrettable days in modern Welsh history."
Liverpool City Council apologised in 2005 for the "hurt" and "insensitivity" of the drowning of Capel Celyn in 1965.
Seventy residents of the village, near Bala, had to leave their homes to make way for the controversial scheme which fuelled Welsh nationalist feeling and calls for devolution.
In 1963, two men were jailed for bomb attacks on power installations in protest at construction of the reservoir.
The flooding of a Gwynedd village to provide drinking water for Liverpool was "a shameful chapter in Welsh history", a UK minister has said.