Peter Arnett reported it. He claimed that an “unidentified major” stated that “We had to destroy the town to save it” about the city of Ben Tre during the Tet offensive. It became something of an anti-war catchphrase at the time.
He has never, to my knowledge, been willing to identify the major in question. He has claimed that the army launched an investigation into the source of this quote and that indentifying the major would endanger his (the major’s) career.
Others have claimed that the army never investigated the matter and quite frankly don’t care who said it. It has also been claimed that, in fact, it was the Viet Cong who did the lion’s share of the damage to Ben Tre.
Major Phil Cannella, who was the commanding officer at Ben Tre, has stated that he remembers telling Arnett that it was a shame that some of the town was destroyed during it’s defense, but denies the well known quote.
For the record, Ben Tre had a population of about 50,000 at the time. It was a city, not a village. And it was far from entirely destroyed, though areas of the city did take heavy damage.