So instead he was released and killed Mr Whelan six hours later.
The warrant had been issued when he failed to appear for a hearing at Liverpool Crown Court on 27 June.
The report, by Solicitor General Vera Baird, concludes there was nothing in Joseph's offending history that could have led the agencies involved to foresee the killing of Richard Whelan.
But the report adds: "However, what we have found is what may best be described as a lackadaisical or nonchalant approach within the criminal justice system to many routine aspects of the handling of cases, the cumulative effect of which was to lead to the sequence of events which culminated on 29 July 2005.
"The lack of diligence in verifying suggested bail conditions, scant evidence of enforcement of those conditions and a failure to deal effectively with breaches when they occurred, all contributed to events taking the course they did.
"This was compounded by a lack of communication."
It adds: "There seems to be too ready an acceptance of the commission of offences while on bail, insufficient rigour in respect of checking the validity of proposed bail conditions, and an apparent acceptance of the continual breach of bail conditions."
The report recommends that ministers should consider giving prisons "enhanced access" to the Police National Computer (PNC) so they have full information about individual inmates, and whether there are outstanding charges or warrants.
It notes the same recommendation was made in 2006 by the inquiry into the racist murder of inmate Zahid Mubarek at Feltham young offenders institution in west London.
But still only 46 jails have access to any data from the PNC.
Mr Whelan was with his girlfriend, Kerry Barker, 38, on the top deck of the number 43 bus when the attack occurred.
CCTV footage showed him struggling with Joseph shortly after Joseph threw chips at Ms Barker and another woman.
Mr Whelan was stabbed through the heart and had six other stab wounds.
Joseph admitted manslaughter on the grounds of diminished responsibility after a jury at his second trial failed to reach a verdict on a murder charge.
The jury in his first trial in May 2007 also failed to reach a verdict on a charge of murder.
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