The Equality Commission has found that Newry and Mourne District Council failed to comply with its own equality scheme when deciding to retain the name 'The Raymond McCreesh Park' for a children's play park in Newry.
The commission said the decision failed to take into account the implications of the decision on the Protestant and unionist community.
The playground was dedicated to Raymond McCreesh in 2001 when the council did not have an equality scheme in place.
In December 2012, when an equality scheme was adopted, the council voted in favour of retaining the name, sparking outrage.
When the Equality Commission investigated it found that the decision to retain the name flouted the council equality scheme it had in place in 2012.
The review found that the council was "more focused on process and on maintaining the name of the play park than on paying due regard to the need to promote equality of opportunity and regard to the desirability of promoting good relations".
Three recommendations have been made among which include a review of the decision to name the park after McCreesh in a transparent manner.
It is also advising the council to review its policies on naming of its facilities and to report back to the Equality Commission on its progress made.
Michael Wardlow, from the Equality Commission said: "Our investigation has found that little consideration appears to have been given by the council to the impact its decision in this instance might have on the Protestant/unionist community or to the damage it might cause to good relations."
I am not sure it was a mistake, we did our best at that time, but certainly the findings of the Equality Commission say something different.
Michael Carr, SDLP
The SDLP which had supported the naming of the park, something which its leader Alastair McDonnell later said the party regretted, accepted the report's findings.
Group leader on Newry and Mourne council, Michael Carr told UTV the council acted in "good faith" in deciding to retain the park's name.
He added: "The main recommendation is that we review the process and we are quite prepared to do that.
"If a proposal is then forthcoming to rename the park the SDLP will oppose naming this park or any other public space after individuals, whatever their background or label, associated with violence of recent decades as this causes further hurt to victims and their families and becomes a barrier to dealing with the past.
"When the original decision was made the SDLP did so based on multiple sources of advice.
"At the time, it was not in the thinking of the SDLP to cause hurt or distress to anyone.
"Yet hurt and distress was caused and the SDLP regrets that and that is why the SDLP party leader, Dr Alasdair McDonnell acknowledged that hurt and our expressed regret."
The many who admire Irish freedom fighter Raymond McCreesh have as much right to remember him in this way as those who admire unionist peers, British knights and British kings.
Mickey Brady, Sinn Féin
Assembly member Mickey Brady added: "What people must bear in mind is that the request to name this facility Raymond McCreesh Park came from the people of Barcroft/Ballybot on the 20th anniversary of his death in 2001.
"On presentation to Newry and Mourne council of a survey stating their wishes, the council undertook their own survey which found 84% support it.
"Raymond McCreesh was a resident of this district who died on hunger strike in 1981.
"He is viewed as a distinguished republican in the area, where I actually grew up, and his sacrifice is remembered and recognised by the people of Newry to this day.
"From the naming of the park in 2001 until 2008 there were no issues, complaints or problems raised regarding the park's name.
"In 2008 the Newry District Loyal Orange Lodge, which is not located in the vicinity of the park, made a complaint.
"That complaint was investigated by the council and it found, after much deliberation, that the name should be retained.
"There are currently numerous instances of council-owned facilities around Newry being named after people of historical note for example Haughey House, Bagnall's Castle and the Albert Basin area," said the Sinn Féin representative.
Ulster Unionist MLA for the Newry and Armagh, Danny Kennedy, said the findings had "serious implications" for those involved in the decision.
He added: "That is a damning indictment of those who took the earlier decisions to rename the play park.
"The council must now take immediate steps to rescind the earlier decisions, but more than that, there must be sanctions, including surcharges taken against those councillors who were responsible for this disgraceful episode."
Raymond McCreesh, who was linked to the 1976 Kingsmills massacre of the killing of 10 Protestant workmen, died while on hunger strike in 1981.