The five officers, Reynold Bennett, Robert Watton, Bernard Gillan, Paul Goscomb and Gerald Mapp, sued The Guardian over two articles by the newspaper's crime correspondent, Duncan Campbell, in January 1992, which they claimed suggested that they were involved in drug dealing.
The Guardian denied libel in the articles, which reported the transfer of eight officers from Stoke Newington police station in east London following allegations made by drug dealers.
After the jury's majority verdict, Mr Campbell said: "We think it's an extremely important verdict both for national and local newspapers who want to honestly report investigations into alleged corruption."
The officers, who were funded by the Police Federation, face a costs bill unofficially estimated at pounds 600,000.
The number of actions initiated by the Federation has risen by 50 per cent since 1990. In 1995, officers won more than pounds 20m in damages from legal actions, mostly personal injury cases, supported by the Federation.
Yesterday's unsuccessful action followed a Guardian article headed "Police suspected of drug dealing" and "Disquiet dogs community police station".
The court heard that the officers had all been moved from Stoke Newington police station three days earlier while an internal inquiry, Operation Jackpot, looked into the complaints.
They were not suspended, continued their full range of duties and were eventually told that they faced no criminal or disciplinary proceedings.
The prosecution said that the five were identifiable from the reports which, it was claimed, were written in the language of accusation and allegation.
Guardian Newspapers, which denied libel, said the articles merely reported that an investigation was in progress against unidentified individuals.
But because of a ruling by the Mr Justice French, the Judge, The Guardian was unable to present any evidence to the jury that had taken place after the article was published. This included that fact that two people making the allegations in the article were later awarded substantial damages by the police.
The newspaper was also unable to reveal that 44 police officers were investigated during the four-year Operation Jackpot inquiry, which resulted in one conviction.
Commenting on yesterday's case, Fred Broughton, chairman of the Police Federation, said: "The Police Federation is disappointed at the outcome. We are surprised that the jury did not share our view of the meaning of the article."Reuse content