Bulk YBa2(Cu1-y57Fey) 4O8 samples with y=0.00-0.05 were synthesized by an aqueous sol-gel method under 1 atm oxygen pressure. The samples were characterized by XRD for phase purity and lattice parameters, by thermal analysis for oxygen stability as well as by magnetic susceptibility and SQUID measurements for magnetic and superconducting properties. Iron was found to both destabilize the YBa2Cu4O8 phase and have a strong effect on its properties even at very low concentrations. The site assignment proposed for the iron dopant is based on the results of 57Fe Mossbauer spectroscopy studies. The results are compared with the observed iron doping effects in the YBa2Cu3O 7-delta phase.