Members of the RUC and UDR colluded with loyalist paramilitaries in 74 murders in the 1970s, according to an international panel of legal experts.
Thirty-three people died in the Dublin and Monaghan bombings
The four-strong team examined 76 killings between 1972 and 1977 and said there was evidence of collusion in all but two of the cases.
It said some senior officers knew of the crimes but "failed to act to prevent or punish" those responsible.
The panel urged the British government to set up an independent investigation.
They also urged the authorities in the Irish Republic to investigate the claims made about their police.
In response to the report, Chief Constable Sir Hugh Orde said the PSNI's Historical Enquiries Team was set up to examine all of the 3,268 killings during the Troubles.
"This particular panel did not meet with or consult directly with the Historical Enquiries Team," Sir Hugh said.
"I would invite them to come and see for themselves how the investigations and work with the families are progressing.''
The report said: "Credible evidence indicates that superiors of violent, extremist officers and agents, at least within the RUC, were aware of their sectarian crimes, yet failed to act to prevent, investigate or punish them.
"On the contrary, they allegedly made statements that appeared to condone participation in these crimes."
The panel was convened two years ago at the request of the Londonderry-based Pat Finucane Centre.
It examined 25 incidents on both sides of the Irish border, including:
The murder of 33 people in UVF bomb attacks in Dublin and Monaghan on 17 May 1974
The shooting of three members of the Miami Showband - Fran O'Toole, 29, Anthony Geraghty, 23, and Brian McCoy, 33, after a UVF gang posing as an Ulster Defence Regiment patrol flagged their bus down on 31 July 1975.
The killing of Patrick Connolly, 23, on 4 October 1972 in a grenade attack on his Portadown home by the Ulster Volunteer Force
The double murder by the UVF of Catholic Patrick Molloy, 46, and Protestant Jack Wylie, 49, in a bomb attack at Augenlig in County Armagh
The shooting dead of six men in separate UVF gun attacks on two families in County Armagh on 4 January 1976
The panel added: "As early as 1973, senior officials of the United Kingdom were put on notice of the danger - and indeed some of the facts - of sectarian violence by UDR soldiers using stolen UDR weapons and ammunition, and supported by UDR training and information.
"At least by 1975, senior officials were also informed that some RUC police officers were 'very close' to extremist paramilitaries."
The report also said there had been "allegations by at least one former RUC man that the Gardai, the police force of the Republic of Ireland, was not co-operative in bringing fugitives who fled across the border to justice".
The British government told the panel it would be inappropriate to comment as the murders are the subject of inquiries by a number of agencies.
These included the European Court of Human Rights, the PSNI Historical Enquiries Team, and the Police Ombudsman.
Copies of the 108-page report have been given to the British government and the Police Ombudsman's Office.
The independent panel who produced the report were: Professor Douglass Cassel of Notre Dame Law School in the US; Susie Kemp, an international lawyer based in The Hague; Piers Pigou - an investigator for the South African Truth and Reconciliation Commission and Stephen Sawyer of Northwestern University School of Law.
Last year, the Irish government said it was giving Tony Blair a final chance to aid an inquiry into the Dublin and Monaghan bombings.
Irish premier Bertie Ahern said he may take a case to the European Court of Human Rights if Mr Blair did not hand over British government files on the bombings.
No-one was convicted of the bombings.