A report into the murder of solicitor Pat Finucane has concluded there was "no overarching state conspiracy", but "shocking" levels of state collusion.
Sir Desmond de Silva's review of the 1989 murder of the Catholic father of three found that collusion by the state went beyond a failure to prevent the crime.
Sir Desmond examined the role of two British agents in the murder and found that another man involved was later also recruited as an agent even though he was suspected in the UDA murder of Mr Finucane.
While the QC accused successive UK Governments of a "wilful and abject failure" to implement an appropriate legal framework for running agents within paramilitary groups, he said no minister was aware of the plot to kill the solicitor.
Prime Minister David Cameron told the House of Commons the murder was "an appalling crime" and said the degree of collusion exposed was "unacceptable".
And he said, in a message to the family: "I am deeply sorry."
Mr Cameron told MPs the de Silva report highlights "shocking" levels of state collusion.
The Army and Special Branch had advance notice of a series of planned UDA assassinations, but nothing was done, he said.
Mr Cameron said De Silva found that employees of the state and state agents played "key roles" in the Finucane murder, adding: "It cannot be argued that these were rogue agents."
The review found that the Army must take a degree of responsibility for targeting activities carried out by the UDA's Brian Nelson, said Mr Cameron.
There was a "relentless" effort to defeat the ends of justice after the killing and Army officials provided the MoD with highly misleading and inaccurate information, Mr Cameron said.
But the review found no evidence that any Government was informed in advance of Mr Finucane's murder or knew about the subsequent cover-up, he said.
Mr Cameron said the Finucane family suffered "the most grievous wrongs" and he respected their view that the de Silva review was not the right response.
But he said he disagreed with them, and said a public inquiry might not have uncovered so much information about the killing.
In his report Sir Desmond said he was in no doubt that state employees were involved in collusion with terrorist killers.
He said: "The real importance in my view is that a series of positive actions by employees of the State actively furthered and facilitated his murder and that, in the aftermath of the murder, there was a relentless attempt to defeat the ends of justice.
"My review of the evidence relating to Patrick Finucane's case has left me in no doubt that agents of the State were involved in carrying out serious violations of human rights up to and including murder.
"However, despite the different strands of involvement by elements of the State, I am satisfied that they were not linked to an over-arching State conspiracy to murder Patrick Finucane."
In a statement to the House of Commons, Mr Cameron said: "The collusion demonstrated beyond any doubt by Sir Desmond - which included the involvement of state agents in murder - is totally unacceptable.
"We do not defend our security forces - or the many who have served in them with great distinction - by trying to claim otherwise.
"Collusion should never, ever happen. So on behalf of the Government - and the whole country - let me say once again to the Finucane family, I am deeply sorry."
Labour leader Ed Miliband urged the Prime Minister to launch a public inquiry into the killing.
But Mr Cameron said he disagreed with the family's demand for a public inquiry, arguing that it might not have uncovered so much information about the solicitor's death.
"I respectfully disagree with them that a public inquiry would produce a fuller picture of what happened and what went wrong," the PM told MPs.
"Indeed the history of public inquiries in Northern Ireland would suggest that, had we gone down this route, we would not know what we know today."
The three full criminal investigations carried out by former Metropolitan Police Commissioner Lord Stevens amounted to "the biggest criminal investigation in British history", he said.
Mr Cameron said he had asked Defence Secretary Philip Hammond, Northern Ireland Secretary Theresa Villiers and Cabinet Secretary Sir Jeremy Heywood to report back to him on issues arising from today's report, and promised to publish their responses.
He told MPs: "Northern Ireland has been transformed over the past 20 years and but there is still more to do to build a genuinely shared future.
"One of the things this Government can do to help is to face up honestly when things have gone wrong in the past.
"If we as a country want to uphold democracy and the rule of law then we must be prepared to be judged by the highest standards. And we must also face up fully when we fall short."
Mr Cameron said the de Silva report made "extremely difficult reading", setting out evidence of "shocking" levels of collusion in areas such as "identifying, targeting and murdering Mr Finucane, supplying a weapon and facilitating its later disappearance and deliberately obstructing subsequent investigations".
"When you read some of the specific cases in the report... it is really shocking that this happened in our country," said the Prime Minister.
Today's report confirms that employees of the state and state agents played "key roles" in the murder, said Mr Cameron. He told MPs that Sir Desmond had named Brian Nelson and William Stobie as two agents in the pay of the state who were involved, together with a third man who became a state agent after being involved in the murder.
And Mr Cameron said: "It cannot be argued that these were rogue agents. Indeed Sir Desmond concludes that Army informer Brian Nelson should 'properly be considered to be acting in a position equivalent to an employee of the MoD'."
"Most shocking of all", Sir Desmond found on the balance of probabilities that Mr Finucane was proposed by an RUC officer to a loyalist paramilitary as a possible UDA target.
Sir Desmond found that there was "significant doubt" whether Mr Finucane would have been murdered by the Ulster Defence Association had it not been for the involvement by elements of the state, said Mr Cameron.
Actions by employees of the state "actively furthered and facilitated his murder", including by leaks of security force information to loyalist paramilitary groups. Sir Desmond found that in 1985 85% of the UDA's intelligence originated with sources within the security forces.
After the killing, Sir Desmond finds that senior Army officers "deliberately lied to criminal investigators", while the RUC Special Branch was responsible for "seriously obstructing the investigation", said the PM.
Sir Desmond found no evidence of an "over-arching" state conspiracy and no evidence that any government minister knew in advance of the planned killing or were subsequently informed of any intelligence that any agency of the state had received about the threat to his life.
Mr Cameron said it was "agony" to read the de Silva report, but stressed that the collusion involved a small minority of those working in the police and security agencies in Northern Ireland.
Since the events of 1989, "policing and security in Northern Ireland have been transformed, reflecting the progress we have made in recent years". The Force Research Unit and Special Branch of the RUC have both been disbanded, while the Police Service of Northern Ireland now "commands widespread support across the whole community", he said.
"Through all these measures both this Government - and its predecessors - have shown a determination to do everything possible to ensure that no such collusion ever happens again," said Mr Cameron.
Mr Miliband told the House of Commons that Labour had begun to set up a public inquiry - which was recommended as a result of the Weston Park agreement between the British and Irish governments in 2001 - before it lost the last general election in 2010.
He said the coalition's failure to press ahead with a public inquiry was "at odds" with the peace process.
"We must, as the United Kingdom, accept that our state sometimes did not meet the high standards we set ourselves through the Northern Ireland conflict," said the Labour leader.
"Anyone reading this report will believe it is an appalling episode in our history.
"All sides of the House believe that we must establish the full and tested truth about Pat Finucane's murder, but on this side of the House we continue to believe that a public inquiry is necessary for his family and Northern Ireland."