A catalogue of errors by probation and parole staff in the management of two criminals who killed financier John Monckton were identified by an official inquiry today.
In a highly critical report, chief inspector of probation Andrew Bridges said there had been a "collective failure" in the supervision of Damien Hanson and Elliot White.
Four members of Probation Service staff have been suspended following the report.
Mr Bridges said it was not his role to recommend disciplinary action against individuals, but he said his review had found "serious deficiencies" and he criticised some of those involved in the case.
"Our report is clear," he said. "The mismanagement of these cases did fail to reduce the risk posed to the public by these two men."
Mr Monckton was killed during a robbery at his three-storey home in Chelsea, west London, in November 2004.
Mr Bridges' report was commissioned by the Home Secretary in the wake of the convictions of Hanson and White at the Old Bailey last year.
The report identified, but does not name, five individuals involved in the management of Hanson's case, and two in the handling of White's supervision.
Mr Bridges said: "It is not our role to start or recommend any disciplinary proceedings against individuals - that is the role of the employing authorities."
The most "glaring deficiency" in the management of Hanson's case was the fact that he was required to report to a probation office inside an exclusion zone that had been set up following his release from an earlier jail sentence.
This was "utterly extraordinary" and completely unacceptable, Mr Bridges said.
"While it is not possible to eliminate risk altogether when managing an offender in the community, the public is entitled to expect the authorities to do their job properly in managing serious and dangerous offenders - which simply did not happen in the cases of Hanson and White," he said.
"This independent review has identified many serious deficiencies amounting to a collective failure in the way these two men were managed."
In the case of Hanson, who was convicted of Mr Monckton's murder, there were "significant failures" in the way he was supervised after his release from prison.
Crucially, he was not dealt with as a high risk offender despite having previously been assessed as such, the report found.
The parole board's original decision to release him was "defensible", but the release plan drawn up was "not fit for purpose".
In the case of White, who was convicted of Mr Monckton's manslaughter, there was a failure to enforce his drug treatment and testing order properly.
"We are very critical of the fact that individuals who found themselves having to deal with these cases, under unsatisfactory organisational arrangements, did not show greater initiative in making decisions and taking action to ensure that the cases were better managed," Mr Bridges said.
The report contains a series of recommendations for the agencies involved in the management and supervision of Hanson and White.
It said their cases illustrated "the exact opposite of effective offender management", describing the way they were dealt with as " offender mis-management".
"The cases have clear implications for changes in policy and practice that could significantly improve public safety and confidence," the report concluded.
"It is vital that everyone connected with the early release of prisoners and the supervision of offenders in the community commits themselves to improving practice to ensure the mistakes made in these cases are not repeated."
The report said it was impossible to know whether Mr Monckton would still be alive today if Hanson and White had been dealt with properly by the authorities.
But Mr Bridges said their cases were not exceptional and said probation and parole staff must learn the lessons from the mistakes that were made.
Hanson, 25, was sentenced to life with a minimum tariff of 36 years earlier this month for Mr Monckton's murder.
He also received automatic life sentences for attempted murder and robbery, with specified terms of 10 and six years respectively.
White, 24, was jailed for a total of 18 years for Mr Monckton's manslaughter, wounding with intent and robbery.
The pair tricked their way into the wealthy financier's elegant home in Upper Cheyne Row in Chelsea and left him dead, his wife Homeyra fighting for her life and their young daughter Isobel terrified.
Hanson had been let out of jail only a few months earlier, having been released halfway through a 12-year sentence for attempted murder.
An official risk assessment had calculated his chances of re-offending were 91% yet his case was managed at the lowest risk level.
White was out on bail at the time of the robbery awaiting a court appearance for heroin and cocaine charges, for which he was later sentenced to three years.
He had also tested positive for cocaine, cannabis and morphine in the month before Mr Monckton's killing and had a series of convictions for drug offences.
The Home Secretary Charles Clarke said the failings identified in Mr Bridges' report were "unacceptable" and that he took responsibility for the case.
"The murder of Mr Monckton was an appalling act and when the judgment was finally given, it was obvious that there were major failings in probation and parole in terms of the dealings with Hanson and White," he said.
"What it demonstrates absolutely clearly is that there were unacceptable failings in terms of public protection which were the responsibility of the London Probation Service and the Parole Board.
"I deeply regret that this happened and pass my full regret and apologies to the family and friends of John Monckton."
He added: "I take responsibility and my responsibility is to do whatever I can to make sure it cannot happen again.
"I commit myself to bringing about changes in the public protection system."
Mr Clarke said he accepted the report's recommendations "unequivocally" but said it was necessary to go still further to ensure confidence in the system was restored.
"It is necessary to look very carefully at the way in which we supervise people who were convicted before 2004," he said.
"I will report back by the Easter recess."
He added that further measures may be necessary to ensure such a tragedy could not happen again.
He also said that individual responsibility for offenders was a factor.
Mr Clarke admitted there was always a risk element to managing offenders in the community, but gave a guarantee that he would make the necessary changes to ensure a repeat of the Monckton tragedy was as unlikely as possible.
Harry Fletcher, assistant general secretary of probation union Napo, said the service had to be "properly resourced in order to carry out its duties efficiently".
He said: "During 2004, when this tragedy occurred, the London Probation Service was in financial chaos and facing an overspend, was undergoing reorganisation and was experiencing a recruitment freeze.
"Staff were not allowed to carry out routine prison visits and individual boroughs had up to 25% probation officer vacancies.
"During 2004, 1,478 licensees came under the supervision of the Probation Service, where the risk to the public was considered very high and a further 11,280, where the risk was described as high.
"In all, 1,374 of this caseload were recalled to custody, and 79 (0.6%) of the total were charged with a further serious offence."
Mr Fletcher said staff had also been hampered by a new IT assessment system known as the Offender Assessment System (OASys). He said they had found it "poorly designed" and claimed its prime purpose was "producing data for the Home Office, rather than analysing the behaviour of offenders".
He continued: "The situation in Inner London Probation is still chronic. There are 160 probation officer vacancies and up to 300 prisoners, serving four years or more, have not been allocated.
"It is, however, encouraging that London's performance is much improved since 2004. The service has the potential to do much better with adequate resourcing."
Mr Fletcher said: "The suspension of four staff members causes Napo great concern. It is absolutely essential that corporate responsibility is accepted when further offences are committed by former prisoners on licence. The Probation Service cannot offer 24-hour surveillance in individual cases."
The Probation Service is expected to release a statement about the suspensions later.
The shadow home secretary David Davis said: "This problem starts with a policy that has created a lack of prison places - the direct consequence of which is that people who should be in prison are not in prison.
"This inevitably puts people at risk - especially when compounded by the failures we have learnt of today.
"The public will properly demand that the Government is more serious about maintaining their safety. This can only be achieved by having a policy that allows all dangerous criminals to be locked up for a proper period of time."