The Clegg family was said to have broken down when the verdict was delivered, while Karen Reilly's father, Sean, was clearly upset.
The paratrooper was originally convicted of the murder of the 18-year- old. Appeals were rejected by the Court of Appeal in Belfast and the House of Lords, but last year the courts quashed the guilty verdict and ordered a retrial of the case.
The nine-year saga illustrated differing perceptions of army actions in middle England and nationalist Ireland. The paratrooper's case was supported by campaigns by senior soldiers and sections of the British media.
In Belfast, nationalist opinion was angered first by his early release after serving two- and-a-half years of a life sentence and later when he was accepted back into the Army and subsequently promoted.
Although Mr Justice Kerr acquitted Clegg on the charge of murder, he upheld the earlier trial's guilty verdict of attempting to wound with intent the car's 17-year-old driver, Martin Peake, who was also killed in the incident. Mr Justice Kerr said he could not be certain Clegg fired the shot which entered the rear of the car, adding: "I think that it is very likely that he did but I cannot be sure of it. He is therefore entitled to be acquitted in relation to this shot." In his judgment he repeatedly said he did not believe Clegg had told the truth in evidence, describing part of his story as "a farrago of deceit and untruth".
Outside the court, Clegg's legal adviser, Simon McKay, said: "Neither Lee nor his family really understood what the verdict was until it was explained ... after the court finished. All of them broke down in tears." He said Clegg intended to appeal against the outstanding conviction.
The Ulster Unionist security spokesman, Ken Maginnis, said he sympathised with the families of those killed, adding: "I think justice has been done and is now being seen to be done."
Joe Hendron, former SDLP MP for West Belfast, said the two teenagers had been "slaughtered and summarily executed by the elite of the British Army."
Sinn Fein condemned the verdict as an insult to the family of Karen Reilly and a threat to the peace process. A spokesman said: "It couldn't have come at a worse time ... when people are working very hard to build and consolidate the peace process."Reuse content