Foreign Secretary William Hague confirmed that she was killed by a grenade thrown by a US soldier during the attempt to free her after she was taken hostage in Afghanistan earlier this year.
It was initially reported that an explosive suicide vest detonated by her captors caused Ms Norgrove's death in October but it later emerged her injuries were the result of the grenade thrown during a firefight at the compound where she was held.
In a Commons statement Mr Hague said a joint US-UK investigation "found that the failure to disclose information that a grenade was thrown breached US military law.
"As a result members of the rescue team have been disciplined for failing to provide a complete and full account of their actions in accordance with US military procedure."
Speaking after the publication of the report, John and Lorna Norgrove said:
"We are grateful to have been briefed in detail by the UK and US military officers who led the inquiry into Linda's kidnapping and subsequent failed rescue attempt. We would like some time to digest this and the contents of the report before we make any further comment. We will issue a statement early next week and would ask the media to respect our privacy in the meantime."
Mr Hague defended the decision to launch a raid to rescue Ms Norgrove, who was taken hostage on September 26.
He told MPs the team selected to carry out the operation on October 8 had "specialist training and experience in carrying out hostage rescue operations".
Mr Hague said: "We judged that Linda Norgrove's life was in grave danger from the moment she was abducted, and we feared that her captors would pass her higher up the Taliban chain of command or move her to more inaccessible terrain.
"We also judged that the only credible prospect of securing her release was through a rescue attempt, which is why I authorised such an attempt to be made."
The investigation into the circumstances surrounding Ms Norgrove's death was led by US Major General Joseph Vogel and British Brigadier Robert Nitsch.
The 10-man team interviewed all the personnel involved and assessed "hours of video evidence and hundreds of pages of documentary evidence".
Mr Hague said he was grateful to the US who agreed to "share their most sensitive operational information with us".
Ms Norgrove's captors were traced to two small groups of buildings in the mountainous Dewagal valley in Kunar province, Mr Hague said as he described the events that took place on the night of her death.
When the assault was launched, US troops believed Ms Norgrove was being held in the upper set of buildings, but she died after being caught up in fighting near the lower group of buildings.
Mr Hague said: "The operation took place during the night in total darkness. US forces were required to land on the near-vertical incline of a rugged mountainside, 8,000 feet in height, within a narrow valley, and to assault a series of buildings built into the steep slope on several levels.
"On the basis of intelligence, analysis and surveillance it was judged that Linda was being held in the upper group of two groups of buildings.
"One of the two teams of soldiers landed near the lower group of buildings. The team came under attack as soon as they left their helicopter.
"As the soldiers progressed towards these lower buildings, Linda Norgrove's captors came out and were engaged by the soldiers who were advancing on a narrow ledge and under threat.
"A grenade was thrown by a member of the rescue team who feared for his own life and for those of his team, towards a gully from which some of the insurgents had emerged.
"When the grenade was thrown no member of the team had seen or heard Linda Norgrove.
"All the actions I have described so far took place within the space of less than a minute.
"The team moved on immediately to the other group of buildings higher up the mountainside where they believed Linda Norgrove was being held.
"It was when they returned to the first location that it became apparent that Linda had been taken by her captors into the gully into which the grenade had been thrown, and where her body was now discovered.
"She was examined immediately by the team medics. The investigation team had access to the provisional post mortem results, which concluded that Linda Norgrove died as a result of penetrating fragmentation injuries to the head and chest.
"After the investigation it is clear that these injuries were caused by the grenade."
Ms Norgrove had been working for American-based aid organisation Development Alternatives Inc (DAI) involved in encouraging poor rural farmers to stop growing illicit opium poppy crops.
More than 250 mourners attended Ms Norgrove's humanist funeral at Uig on Lewis on October 26. She was buried at picturesque Ardroil Cemetary - near the beach where the Lewis Chessmen were discovered - and just a few miles from her family home.
Her parents have set-up the Linda Norgrove Foundation to carry on their daughter's work in Afghanistan and have donated over 60,000 of their savings to kick-start the fund.