We investigate the role of unitarization effects in virtual photon-proton (γ^*p) interactions at small x. The q\bar{q}-fluctuation of the initial photon is separated into a small distance and a large distance component and a model for the unitarization of each component is proposed. The Born approximation for the small size component is calculated using QCD perturbation theory. Reggeon diagram technique is used in order to obtain a self-consistent scheme for both total γ^*p cross section and diffractive production. The model gives a good description of HERA data in the small-x region, with a single Pomeron of intercept 1.2.

27 pages, 8 postscript figures