He says the Bush administration will propose trying detainees using modified court-martial procedures.
Key changes would include admitting hearsay evidence, limiting rights against self-incrimination before a trial and restricting defendants' access to classified information.
Evidence obtained under duress will be allowed, unless considered unreliable by a military judge.
Admitting coerced testimony could allow interrogation techniques such as "water-boarding" to simulate drowning, use of military dogs and other methods that military lawyers have said are inconsistent with the Geneva Conventions.
Around 450 prisoners are being held at the US naval base at Guantanamo Bay including Australian David Hicks.
"We can detain any combatants for the duration of the hostilities," Mr Gonzales told the Senate Armed Services Committee.
"If we choose to try them, that's great. If we don't choose to try them, we can continue to hold them," he said.
To prevent alleged terrorists from having access to confidential information, judges handling the cases could have the power to temporarily exclude defendants from their own trial if deemed necessary for national security.
Mr Gonzales said the administration had no intention of using the proposed military commission system to try US citizens or prisoners of war.
The Washington Post, quoting anonymous Bush administration officials, reported that the White House also hopes to allow the secretary of defence to add crimes at will to the military court's jurisdiction.
The Democrats say the changes proposed by Mr Gonzales still fall short of the US Supreme Court's standards for fair trials.
Last month the Court ruled President Bush had overstepped his authority in forming military commissions to try detainees.