The review was ordered by Prime Minister David Cameron after the high-profile collapse of the case against a man accused of murdering four soldiers in the IRA's bombing of Hyde Park in 1982.
John Downey, 62 and from Co Donegal, had denied all the charges against him.
He walked free from the Old Bailey because he had wrongly been told in a letter, received in 2007, that he was not wanted by the Metropolitan Police.
The Hallett report was published on Thursday.
Northern Ireland Secretary of State Theresa Villiers outlined key findings in the House of Commons, adding that the Government fully accepted the findings.
This Sunday marks the 32nd anniversary the Hyde Park bombing. I know that recent events have revived painful memories for those affected by that terrible atrocity and I apologise again on behalf of this government for any hurt this has caused.
Secretary of State Theresa Villiers
Lady Justice Hallett was promised full co-operation and access to all relevant material by official departments and agencies, and vowed in March to "conduct a full and rigorous examination of the administrative scheme from its inception to date".
Her report notes that that the scheme "did not impact upon ongoing investigations into offences" and that files on terrorist offences "were not closed".
However, there were serious concerns regarding failings in the scheme's administration.
The report notes that the scheme "evolved", rather than having been designed and that, as a result, there was "no overall policy and no one with overall responsibility/accountability for it".
Lady Hallett states in her findings: "It should be noted that it was not intended that the scheme should provide an amnesty.
"Gerry Kelly and Gerry Adams of Sinn Féin were repeatedly informed that, in the absence of a legislative amnesty, the normal criminal justice process could not be circumvented."
There has been a great deal of misunderstanding about and misreporting of the administrative scheme, some of which may have unwittingly added to their distress.
Lady Justice Hallett
In addressing the particular case of John Downey, the report found that it was not the fact he had been sent a letter that caused his trial to collapse - rather the fact that the letter contained a false statement of assurance.
"The fact that Mr Justice Sweeney stayed the case against Mr Downey as an abuse of process does not mean that any future prosecution of another individual who was sent a similar letter would necessarily amount to an abuse of process," Lady Hallett notes.
"Each case will turn on its own facts."
Police in Northern Ireland, who are separately reviewing the issuing of the letters, came in for heavy criticism when the OTRs scheme came to light.
Lady Hallett noted "catastrophic consequences" of failings by the PSNI, further stating that they had "at least three" opportunities to rectify the situation regarding John Downey.
In a statement, Chief Constable George Hamilton again apologised and accepted the findings which he said were clear.
"Police wrongly informed the prosecuting authorities that an individual was not wanted, when there was information to suggest that he was wanted by the Metropolitan Police. On that basis the prosecution for the Hyde Park bombing failed," he said.
"In relation to the recommendations in the Hallett review, the PSNI has already commenced the process to review each of the 228 cases involved in the administrative scheme.
"Police have an ongoing responsibility to review evidence, and as is always the case, where new evidence exists, we will investigate and present the information to the prosecuting authorities."
However, Labour MP Kate Hoey said in the Commons that Tony Blair's past letters to Sinn Féin leader Gerry Adams showed that the former prime minister was responsible.
DUP MP Ian Paisley Jr responded, saying: "Do you agree with me that it would be a travesty heaped upon an injustice if a single police officer was to be scapegoated for this error?
"And if Tony Blair at the same time was to be elevated to near sainthood by some people?"
I want to reiterate the PSNI's apology for the additional pain the families have had to endure as a result of the failure to secure justice for their loved ones. My colleague, ACC Drew Harris, has also met with the families in person to express our sincere regret.
Chief Constable George Hamilton, PSNI
Lady Hallett's review has also identified two other occasions when it appears that a letter was sent in error.
One of the cases involved a mix-up with individuals of the same name, but different dates of birth.
The second involved an individual who was told in a letter that he was not wanted, but without clarification that the assurance "only related to offences committed before the Belfast Agreement".
The report notes: "He was in fact 'wanted' for serious offences committed in 2003."
In the wake of the scheme coming to light, further concerns were raised when it was revealed that more than 350 people had received the Royal Prerogative of Mercy (RPM) over the last 35 years.
Lady Hallett's review found 13 cases where the RPM had been granted to OTRs.
"All the OTRs on the lists who were given the RPM were convicted prisoners who had escaped," the report notes.
It added that they were individuals whose circumstances were thought to be similar to prisoners released early under the Good Friday Agreement, but who did not qualify for reasons including having served time in jail outside Northern Ireland.
"Under the RPM, their sentences were remitted and they were released, some of them on licence," the report states.
"We have identified no cases where the RPM was used as a pre-conviction pardon for an OTR."
A separate inquiry into the 'on the runs' scheme is being carried out by the Northern Ireland Affairs Select Committee.
In publishing her report, Lady Justice Hallett said she hoped it would assist that inquiry and added: "I urge everyone to read this review carefully before commenting upon it and to choose their words with care when they do, conscious of the many victims who are affected by this issue."