Pc Ian Terry was gunned down as Greater Manchester Police's firearms unit practised in a disused factory in the city on June 9, 2008.
The jurors at Manchester Coroner's Court, who heard of a series of failures by the officer who shot him, were also critical of the firearms unit and its training regime.
An unlawful killing verdict was recorded in relation to both Pc Terry's death and the planning and conduct of the training exercise.
Pc Terry, 32, from Burnley, Lancashire, brandished an unloaded handgun during the exercise while playing the role of a criminal fleeing in a car.
On seeing him holding the gun, his colleague, granted anonymity and identified only as Chris during the inquest, acted "instinctively" and pulled the trigger on his Remington 870 pump action 12-bore shotgun, the hearing was told.
Pc Terry, who was not wearing body armour, was hit from a distance of about 12 inches by a blank round of a specialist ammunition called Round Irritant Personnel (RIP), designed to burst tyres and break windows and deadly at close range.
There was no immediate reaction from Pc Terry's wife Joanne as the jury's conclusions were announced.
As well as returning the verdict, by a majority of 9 to 2, the jurors were also asked to answer "Yes, No or Don't know" to pre-prepared questions on five related issues.
The jury ruled, again by a majority of 9 to 2, that the "culture and practice" of GMP's firearms training unit was "inappropriate" in its "systems and practices" dealing with risk assessments and general preparations and this played a part in Pc Terry's death.
They also said it was "unsafe" to use RIP rounds in the role-playing exercise and agreed that Pc Terry "would have been saved" if a training package had been properly prepared and approved before the exercise.
The jurors also ruled that the planning and conduct of the fatal exercise was "foreseeably unsafe".
And they agreed that Pc Terry's life would probably have been saved if the following further precautions had been taken; for trainers to "shadow" officers carrying shotguns; ensuring paint-balls were not used with live rounds on the same exercise; simplifying the drill with fewer officers involved and repositioning of trainers to view the target vehicle.
At the time of Pc Terry's death the Crown Prosecution Service (CPS) said there was "insufficient evidence" to prosecute "Chris" or GMP in the criminal courts.
But today's verdict will increase pressure on the CPS to look at that decision again, according to legal experts.
It could lead to criminal charges against one or more officers or corporate manslaughter charges against the force on the grounds of gross negligence, lawyers said.
The force's Chief Constable Peter Fahy was in court for the verdict.
Nigel Meadows, coroner for Manchester, said: "It is obvious that the CPS would want to review the verdicts and to that end I'm going to direct that a copy of the whole of the proceedings be sent to them.
"What they decide to do with them is entirely up to them."
Mr Meadows, under coroner's rules, can make recommendations to other bodies to prevent further deaths.
He added: "There are both national and local implications that should be taken into account for those who plan and take part in such exercises."
He paid tribute to the way the Terry family conducted themselves throughout what he said was a traumatic five weeks.
"This has been a long time since Ian's death but I hope that the inquest will be a significant step along the way of the grieving process. Sadly, I do not think it will be the end."
Chris, who is still a serving police officer, now on restricted duties, told the hearing that at the fatal moment he was not aware of pulling the trigger - but conscious of the fact that he was engaged in a training exercise involving fellow officers.
In releasing the safety catch on his shotgun before ready to fire, he agreed he broke the "golden rule".
Nine other officers are also on restricted duties.
A Health and Safety Executive (HSE) investigation is still to be held.
Much of the inquest hearing, which would normally be open to press and public throughout, was held behind closed doors after Mr Meadows imposed a number of orders banning reporters from the court.
For much of the hearing, the court was divided off from the rest of the room by 12ft screens, with access through a locked door.
Many of the officers involved, including Chris, were granted anonymity orders by the coroner, giving evidence behind the screens.
The coroner ruled that anonymity orders on the officers involved would remain.
CCTV footage of the moment Pc Terry was shot was also not shown in open court.
Reporters and members of the public were left listening to verbal descriptions and a running commentary but were not allowed to view the images.
Greater Manchester Police claimed much of the evidence, if given in public, would compromise police tactics when dealing with dangerous criminals.
Joanne Terry later left court wiping tears from her eyes.
Pc Terry's family are expected to make a statement outside court along with Chief Constable Fahy on behalf of GMP.
Mr Fahy issued a personal apology to Mr Terry's family for his force's "failure to keep him safe" as he conceded that some of its systems and practices in the training exercise contributed to his death.
In a statement, he said: "Ian Terry was a well-liked and highly-respected police officer whose death has meant a great loss to the force and his loving family.
"Ian was a proud member of GMP's tactical firearms unit, a team of 400 officers who make a huge contribution to tackling crime in Greater Manchester.
"I would like to personally apologise to Ian's family for GMP's failure to keep him safe on June 9 2008. I accept that some of our systems and practices were inappropriate and did play a part in Ian's death.
"Over the past few weeks Ian's family have had to go through the harrowing experience of re-living the events that led to his death. They have shown extreme courage and dignity whilst doing this and I would like to pay tribute to them for this.
"This inquest has been held to ensure we all understand why Ian's death happened and what can be done to prevent such a tragedy happening again.
"Since Ian's death, GMP has made a number of changes to policies and re-enforced existing policies to ensure training exercises are carried out in the safest way possible.
"As a force we need to continue to carry out firearms training if we are to keep the public in Greater Manchester safe. However, we need to do everything we can to ensure this training is delivered safely, and everything possible is done to minimise the risks involved.
"Even though the inquest has concluded, there are still inquiries to be carried out and possible further proceedings. It would therefore be inappropriate for me to comment further until the Crown Prosecution Service and the Health and Safety Executive have concluded their investigation."
