United lost 3-2 at home to a fearless and skilful Athletic side to register their second successive European defeat at Old Trafford.
The Premier League champions, beaten 2-1 at home by Ajax in the previous round, have now won just once in five European outings at Old Trafford this season.
"We were well beaten, I have to say they were the better team," Ferguson told Channel Five.
"I thought our defending wasn't very good tonight and that kept us on the back foot all the time. Our attacking play was very good at times and it was an open, entertaining match. But Bilbao were the better side.
"We can still win the game. No question. We showed we can make chances against them, but obviously we have to defend better.
"I need to really look and see how we can maybe bring Rio Ferdinand in without disrupting the league programme."
Athletic took the game to United, pressuring them in their own half in a style which has become the trademark of their eccentric Argentine coach Marcelo Bielsa who led Chile to the last 16 of the 2010 World Cup.
Although Wayne Rooney gave United a 21st minute lead, it was completely against the run of play and Athletic continued to push forward, creating numerous chances while Bielsa paced up and down his technical area, immersed in thought in his characteristic style.
Athletic's fans out-sung the home supporters and were given more to celebrate in the 71st minute with a superbly worked move which ended with Ander Herrera flicking the ball over the United rearguard for Oscar De Marcos to hook the ball in with a first time shot.
That goal had also been on the cards and it got worse for the hosts with a bizarre third which stemmed from a free-kick awarded to Bilbao because United defender Patrick Evra kicked the ball after his left boot had fallen off, infringing the rules.
Athletic swiftly attacked and De Marcos's shot was parried by David De Gea. Although there seemed to be no Athletic player in sight, Rafael was caught napping and the always dangerous Iker Muniain stole in to fire the ball into the roof to net.
"I don't know how you describe the third goal," said Ferguson.
"The referee's stopped play...the issue that Patrice didn't have a boot on, they say you're not allowed to do that. But he only passed it about two feet."
Rooney pulled one back with an injury-time penalty to keep United in the tie, although the task of scoring at least two goals at a hostile San Mames stadium is a daunting one.