The managers of BBC News came under fire in the Hutton report into the death of government scientist Dr David Kelly.
BBC head of news Richard Sambrook admitted mistakes
Lord Hutton criticised BBC director of news Richard Sambrook for replying to complaints from Downing Street, without first examining a reporter's notes to see if they supported a story on Radio 4's Today programme.
The story, by correspondent Andrew Gilligan, quoted an intelligence source as saying a dossier on Iraq's weapons of mass destruction had been "sexed up". The source was later revealed to be Dr Kelly.
The prime minister's communications director Alastair Campbell had written to Mr Sambrook demanding the answer to a set of questions about the report.
And Mr Sambrook had replied robustly, defending the BBC and accusing Number 10 of trying to intimidate the corporation before and during the war.
"The BBC management failed, before Mr Sambrook wrote his letter of 27 June 2003 to Mr Campbell, to make an examination of Mr Gilligan's notes on his personal organiser of his meeting with Dr Kelly to see if they supported the allegations which he had made," Lord Hutton said.
Lord Hutton said that when management did check Mr Gilligan's notes, they failed to appreciate that they did not fully support the most serious of the allegations Mr Gilligan had made.
They therefore failed to tell the BBC board of governors that the notes did not back up the story, he said.
Lord Hutton suggested the management may have made mistakes because they "failed to appreciate the gravity" of the allegations made in the broadcast.
Yet they were in fact so grave, it was "unreasonable" of them to expect Downing Street to follow the usual complaints procedures which could take weeks or months, he said.
Lord Hutton also criticised the fact that Mr Sambrook and the BBC governors were unaware of an e-mail sent by Today editor Kevin Marsh to head of Radio News Stephen Mitchell, criticising Mr Gilligan's reporting methods.
Lord Hutton said this showed the BBC's management system was "defective" in the way it handled complaints about stories.
The report also criticised the management structure for allowing Mr Gilligan to broadcast his report - much of which turned out to be unfounded - without editors having seen a script of what he was going to say, or having considered whether it should be approved.
In a short statement after the report, BBC director general Greg Dyke said the corporation had already acknowledged and expressed regrets for some mistakes.
Steps had already been taken to improve procedures, he said.
A new complaint and compliance structure had been put in place, and revised editorial guidelines were being published.
In his evidence to the Hutton Inquiry, Mr Sambrook had said he regretted not having reviewed Mr Gilligan's notes in detail before replying to Mr Campbell.
Had he done so, he might have realised the allegation was not directly attributable to Mr Gilligan's source, Dr Kelly, he added.
Mr Sambrook said the BBC had been under "considerable pressure" to reply but "we should have paused and considered at greater length the charges that were being levelled against us".