Ex-Transport Secretary Stephen Byers has been cleared of lying to MPs about Railtrack but told to apologise for telling an "untruth".
Mr Byers says he did not lie or deliberately mislead MPs
MPs on Parliament's standards committee investigated claims Mr Byers lied about how Railtrack was wound up in 2001.
Mr Byers has apologised for giving inaccurate evidence to MPs but insists he did not deliberately mislead them.
The MPs say he was wrong to try to justify his mistake and should now "apologise unreservedly".
The controversy arose following a court case brought by Railtrack shareholders over the company's collapse in October 2001.
The "lying" complaint centred around the Commons transport committee grilling of Mr Byers in November 2001.
Conservative MP Chris Grayling asked Mr Byers if he had begun discussing a change in status for Railtrack before a key meeting in July 2001, at which the company's chairman warned Mr Byers of the financial difficulties.
Mr Byers told MPs that he had not.
But last year he admitted in the course of the High Court case that his answer had been untruthful.
His admission came after the court heard he had ordered an options paper on Railtrack, set up a joint working party with the Treasury to discuss Railtrack's future, and had discussed options with the prime minister before the July meeting.
In their report on Tuesday, MPs on the Commons standards and privileges committee said Mr Byers was not guilty of "contempt" of Parliament, despite being untruthful.
"We do not believe, on the evidence we have seen, that Mr Byers lied to the transport sub-committee as alleged," says the committee.
The MPs say the government had not embarked on a clear strategy of restructuring Railtrack, despite officials working on possible options.
And they say Mr Byers had "no obvious motive" for deliberately misleading the committee.
The North Tyneside MP has already made a personal statement to Parliament but the committee says he should have apologised "unreservedly to Parliament" and recommend he now does so.
The committee brushes aside Mr Byers' claim that his answer was influenced by the "political context" of the Tories claiming there was a government plan to push Railtrack into administration.
It points to the ministerial code which says giving truthful information to Parliament is of "paramount importance".
"There can be no circumstances where it can be justified to derogate from this obligation for political reasons," says the report.
"Mr Byers' answer to Mr Grayling was factually inaccurate, and the political context cannot be used to justify this."
And the MPs suggest the ex-Cabinet minister almost misled Parliament again when he apologised for his original error.
"Mr Byers was unwise to try and devise retrospectively an explanation for his inaccurate answer," says the report.
"We also believe that, in his personal statement, he came close to repeating the error for which he had apologised."
Mr Byers says that when he was questioned by Mr Grayling he did not think the work already commissioned by the government amounted to "discussions" about changing Railtrack's status.
In a statement, Mr Byers said he was pleased the committee had concluded he did not lie.
"This was an extremely serious allegation which the committee has rejected in the clearest possible terms," he said.
Mr Grayling, who is now shadow transport secretary, said: "I think he has little option but to simply say 'I'm sorry' and I hope he doesn't seek to do any more than that."
He told Sky News ministers should learn they must always be "absolutely upfront and accurate.