Key intelligence used to justify war with Iraq has now been shown to be unreliable, the Butler Report says.
The war divided public opinion from its start
The 196 page report says MI6 did not check its sources well enough, and sometimes relied on third hand reports.
It also says the 2002 dossier should not have included the claim Iraq could use weapons of mass destruction within 45 minutes without further explanation.
Tony Blair told MPs he "accepted" the findings and that Iraq may not have had WMD stockpiles when the war started.
Mr Blair said he took "full responsibility" for any mistakes made, saying that they were in "good faith".
"No one lied. No one made up the intelligence. No one inserted things into the dossier against the advice of the intelligence services," he told MPs.
But Conservative leader Michael Howard said the "question he must ask himself is - does he have any credibility left?"
Lord Butler's main findings were:
The limitations of the intelligence in the September 2002 dossier were not "made sufficiently clear," with important caveats removed
- The 45 minutes claim was "unsubstantiated" and it should not have been included without clarification - doing so led to suspicions it was there because of its "eye-catching character"
- Intelligence was pushed to its "outer limits" but not beyond - and there was no deliberate distortion by politicians, any blame was "collective"
- JIC chairman John Scarlett should still take up post of MI6 chief - but future intelligence chiefs should be "demonstrably beyond influence"
Since the war key claims based on intelligence from agents in Iraq, including claims the Iraqis had recently produced biological agents, had had to be withdrawn because they were "unreliable"
- There had been an "over-reliance" on dissident Iraqi sources and human intelligence in general
The report said "more weight was placed on the intelligence than it could bear," and Lord Butler criticised the government for publicly stating the JIC had "ownership" of the dossier, lending it more credibility than it might otherwise have had.
He added: "Language in the dossier and used by the prime minister may have left readers with the impression that there was fuller and firmer intelligence than was the case.
"It was a serious weakness that the Joint Intelligence Committees' warnings on the limitations of the intelligence were not made sufficiently clear in the dossier."
Mr Blair told MPs he accepted mistakes had been made.
"The evidence of Saddam's weapons of mass destruction was indeed less certain and less well-founded than was stated at the time," Mr Blair said.
But he said he had fully expected Iraq's WMD to be discovered by coalition forces.
And he added: "I cannot honestly say I believe getting rid of Saddam was a mistake at all. Iraq, the region, the wider world is a better and safer place without Saddam."
He said the decision to commit British troops was the "hardest he had ever made".
But he had became convinced after the 11 September attacks that a stand had to be taken against rogue states with WMD and "the place to make that stand was Iraq".
With "hindsight", Mr Blair told MPs, the case against Saddam Hussein would probably have been made in a different way, with separate reports from the JIC and the government, but the end result would have been the same.
Liberal Democrat leader Charles Kennedy said the remit of the Butler inquiry had made it impossible for it to deal with the most important issue of the political judgment that informed the decision to go to war.
Former cabinet minister Robin Cook, who resigned over the war, said "the unavoidable conclusion of the content of the Butler report (is) that we committed British troops to action on the basis of false intelligence, overheated analysis and unreliable sources".
Speaking on BBC Radio 4's World Tonight, he called for a full parliamentary debate on the report's findings.
Mr Blair said Saddam had the "clear intention" of wanting to rebuild his arsenal, as outlined in Lord Butler's report.
The report says intelligence agencies and ministers should have re-assessed the information as it become increasingly clear that UN Inspectors were not finding any WMD in the months immediately before the war.
But Lord Butler told a news conference there was no evidence of a deliberate attempt by Mr Blair to mislead the public.
"It would have been very foolish thing indeed for him to have put something in the dossier which he knew or believed to be untrue, when the consequence of the war was going to establish the truth pretty soon," he told reporters.
The Butler Report also criticised the "informality" of decision-making in No 10, with oral presentations relied on which made it impossible for Cabinet ministers to have advance notice of issues to be discussed.
Speaking at a news conference, Lord Butler agreed his committee had been less critical than other inquiries, for example in the US, but he insisted that they had criticised some of the procedures for assessing intelligence.
On the 45 minute claim, Lord Butler told reporters it had been an "uncharacteristically poor piece of assessment."
He said his inquiry had looked at whether the claim had been spun by the government but he decided it had not. It had been seized on by the media because it was new and striking, he added.
Lord Butler was asked by No 10 to look at the accuracy of Britain's pre-war intelligence after the failure to find weapons of mass destruction in Iraq.
The report follows a US Senate inquiry severely criticising American intelligence agencies for the quality of their pre-war information.
In January Lord Hutton's inquiry into the death of Dr David Kelly cleared the government of inserting material it "probably knew to be wrong" against the wishes of the intelligence community in its dossier on Iraq's alleged weapons of mass destruction.