The "shocking" state of affairs at Mid Staffordshire NHS Foundation Trust meant patients admitted as emergencies suffered due to serious lapses in care.
Between 400 and 1,200 more people died than would have been expected in a three-year period, the head of the investigation for the Healthcare Commission said.
Families have described "Third World" conditions at the trust, with some patients drinking water from vases because they were so thirsty and others screaming in pain.
The Commission launched an inquiry after concerns were raised about higher than normal death rates in emergency care, in particular at Stafford Hospital.
The trust argued the anomalies were due to "problems with its recording of data and not problems with the quality of care for patients", the report said.
Not satisfied with this reponse, the Commission launched a formal investigation last year, sifting through more than 1,000 documents and interviewing some 300 people.
It found deficiencies at "virtually every stage", including inadequately trained staff who were too few in number, junior doctors left alone in charge at night and dirty wards and bathrooms.
Some patients were left in pain or needing the toilet, sat in soiled bedding for several hours at a time and were not given their regular medication, the investigation found.
Receptionists with no medical training were also left to assess patients coming in to A&E.
The investigation found heart monitors were turned off on wards because nurses did not know how to use them and some patients were left dehydrated because nurses did not know how to work intravenous fluid systems properly.
The report also found that the Government's target for patients to be seen within four hours at A&E meant patients could be taken to "dumping grounds" to avoid breaching the target.
Some patients had their operations cancelled for up to four days running and were "nil by mouth" for most of those days, leaving them hungry and thirsty.
In one ward, 55% of patients were found to have pressure sores when only 10% had sores on arrival.
The trust was also found to be 120 nurses short in 2007/08, of which about 17 were needed in A&E, 30 in surgery and 77 on medical wards.
The Commission said the trust's board was more focused on finance, targets and achieving foundation trust status, as well as its desire to save £10 million.
Despite the fact concerns had been raised about the trust, it was awarded foundation trust status - designed to mark out outstanding hospitals - just weeks before the investigation was launched.
Earlier this month the trust's chief executive, Martin Yeates, stepped down and has now been formally suspended on full pay, while chairman, Toni Brisby, resigned.
Sir Bruce Keogh, medical director of the NHS, said today there had been a "gross and terrible breach of trust" of patients, adding the report showed there had been a "complete failure of leadership".
He added: "I'm proud of the NHS but actually I'm really saddened by this report."
Dr Heather Wood, who led the Commission's investigation, said the number of excess deaths between April 2005 and March 2008 was between 400 and 1,200, although it was expected the figure of 400 would be closer to the mark.
It is not clear how many of these deaths could have been avoided.
Chairman Sir Ian Kennedy said the report detailed "a shocking story".
"Our report tells a story of appalling standards of care and chaotic systems for looking after patients," he said.
"These are words I have not previously used in any report.
"There were inadequacies in almost every stage of caring for patients.
"There was no doubt that patients will have suffered and some of them will have died as a result."
Local MP, David Kidney, said: "The exhaustive Healthcare Commission report is both definitive and damning.
"In A&E, emergency admissions and medical wards 10, 11 and 12, care standards were unacceptable during the three-year period investigated.
"As a result, some patients experienced intolerable conditions and lessons were not learned by the hospital trust from those experiences.
"So more patients suffered.
"It is galling for patients and patients' relatives and carers that their complaints were not believed or were fobbed off with excuses and promises that the report shows were worthless."
Julie Bailey, 47, has spent 14 months campaigning for an inquiry into Stafford Hospital following the death of her mother in November 2007.
Ms Bailey, from Stafford, was so concerned about the care being given to her 86-year-old mother Bella that she and her relatives slept in a chair at her hospital bedside for eight weeks.
"What we saw in those eight weeks will haunt us for the rest of our lives," she said.
"We saw patients drinking out of flower vases they were so thirsty.
"There were patients wandering around the hospital and patients fighting. It was continuous through the night.
"Patients were screaming out in pain because you just could not get pain relief.
"Patients would fall out of bed and we would have to go hunting for staff. There was such a lack of staff.
"It was like a Third-World country hospital. It was an absolute disgrace."
Eric Morton, chief executive of the trust, apologised to patients but said "significant changes" had been made within a very short period of time, including new management, more staff and new systems in A&E.
Health Secretary Alan Johnson also apologised to families and patients, and announced a review of current A&E services at the hospital as well as one to establish how long problems had been going on for.
He said: "There was a complete failure of management to address serious problems and monitor performance.
"This led to a totally unacceptable failure to treat emergency patients safely and with dignity."
Shadow health secretary, Andrew Lansley, said: "The public will be rightly shocked by the poor standards of care exposed at this hospital.
"It is unacceptable that the pursuit of targets - not the safety of patients - was repeatedly prioritised, alongside endless managerial change and a 'closed' culture, which failed to admit and deal with things going wrong."
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