The report found no evidence of a direct role in the car bomb attack 12 years ago, but it said it could not rule out the possibility of involvement by a rogue element of the security forces.
The inquiry, which cost 46.5 million, concluded that Royal Ulster Constabulary (RUC) officers publicly abused and assaulted the solicitor, and it believed police intelligence on the 40-year-old mother of three had leaked out.
Before her death on 15 March 1999, the lawyer, who worked on a number of controversial cases including those of suspected republican terrorists, had alleged police intimidation.
Those claims gained international attention and the report found police had made "abusive and threatening remarks" about the solicitor. The public inquiry found that the state "failed to take reasonable and proportionate steps to safeguard the life of Rosemary Nelson".
Current chief constable of the Police Service of Northern Ireland (PSNI), Matt Baggott apologised for police failings.
"The inquiry has produced a lengthy and critical report which I respect, and that we now need to study carefully," he said.
"It has found that Rosemary Nelson was not given the attention, impartial treatment or protection that was her right and the responsibility of policing to provide.
"Where there are inadequacies and failings identified, I apologise to her family and friends, and on behalf of the police service, I am sorry."
Secretary of State Owen Paterson presented the report to the House of Commons and noted its finding that there was "no evidence of any act by or within any of the state agencies... which directly facilitated" the killing.
Mr Paterson said: "I am profoundly sorry that omissions by the state rendered Rosemary Nelson more at risk and more vulnerable. It is also deeply regrettable that despite a very thorough police investigation no-one has been charged for this terrible crime."
The 700-word report included two and a half pages of conclusions which list its key findings.
It said it believed that RUC intelligence on Mrs Nelson had leaked out and, whether the information was correct or not, it had "increased the danger to Rosemary Nelson's life".
The report's authors also believed the claims made by Mrs Nelson before her death, that policemen had threatened her during interviews with her clients.Eunan Magee, Mrs Nelson's brother, said the evidence against the RUC, NIO and police Special Branch had been damning.
Fighting back tears, he said that his sister had been vindicated by the report.
"This is not a closed book and hopefully charges will be brought against people who are guilty," he said.
Mrs Nelson's bereaved husband Paul also spoke out over the findings of the report.
He said the relatives had been proved correct in pushing for an independent investigation and said major findings had been made, while Jane Winter, of the human rights group British Irish Rights Watch, backed the view that the report amounted to collusion.
She said other reviews had seen not only direct actions by Government agencies as representing collusion, but also "acts of omission".