Revelations of a state-run doping conspiracy prompted Russia's suspension from the International Association of Athletics Federations (IAAF), ruling the traditional powerhouse out of the Rio Olympics.
IAAF president Coe said the object was now to reinstate a reformed Russia into the athletics body, as the Olympic track and field competition prepares to go ahead without one of its strongest teams.
"Let's be really clear about this -- I'm afraid that Russia has let down their athletes," he told journalists in Rio.
"But we do have to go through a process. We do have to make sure that as and when the time is ready for that that, that it is because... We have a level playing field."
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Coe largely sidestepped questions about the International Olympic Committee's (IOC) decision to allow other Russians to compete, despite calls for an outright ban.
"The IOC made a judgement. It was endorsed by IOC and members and I'm not sure I can add any more than that," he said.
"We've been down that road on a number of occasions and my understanding from all the legal advice we have taken thus far is that this just not going to hold," Coe said.
"But... If there is a fresh approach to that and we are given legal advice that there might be another way to look at that... I would certain be open to that."
But Coe also hoped fans would believe they are watching clean athletes in Rio, despite the welter of scandals which has cast a shadow over sport.
"Yes, the last year has sorely tested all of us and... It has sorely tested our fans and supporters out there. We have to be mindful of where we're come from but our responsibility now is to shape the future.
"So yes, I genuinely hope that they feel that what they're watching is competitors doing what they've been given a god-given talent to do, and they're doing it cleanly.