The other main auxiliary organ of the Sovnarkom was the Defence Council. Established almost a year after the emergence of the Little Sovnarkom, it resembled it in several basic respects: it was a relatively small body of senior government officials, operating from the Sovnarkom offices in the Kremlin, and relieving the Full Sovnarkom of much of the detailed and urgent business of government. In one important respect, however, the two bodies differed. While Little Sovnarkom decisions required approval by the Sovnarkom chairman, and were subject to appeal to the Full Sovnarkom, Defence Council decisions had the immediate and unqualified force of law. In practice, since Lenin, the effective master of the Little Sovnarkom, was also chairman of the Defence Council from its inception, this difference was less than absolute. Nonetheless by and large the Little Sovnarkom is best regarded as a body subordinate to the Full Sovnarkom and the Defence Council as a body coordinate with it at least till 1920.

The Defence Council was set up to organise the economy for war. It was not responsible for the conduct of military operations as such, which were the province of the new Revolutionary Military Council of the Republic, chaired by Trotsky. While strategic issues could come before it if they had serious political implications, such cases were more likely to go straight to the Party Central Committee.