Communications within and between the emergency services failed on the day, thousands of survivors were left to fend for themselves and there was a lack of basic medical supplies, the report found.
The London Assembly's July 7 review committee said it was "unacceptable" that the emergency services were still unable to communicate by radio when underground.
There was also an over-reliance on the mobile phone network, it said.
The committee found that the most striking failure was the lack of planning to care for people who survived or were traumatised by the bombings.
The report revealed that as many as 6,000 people were likely to have been severely psychologically affected by the explosions but that the majority were still not known to the authorities or part of any support network.
This was "completely unacceptable", the report said.
The committee said London's emergency plans for the aftermath of a major incident must be changed to address the failings.
Richard Barnes, who chaired the committee, said today: "There is no doubt that lives were saved by individual acts of incredible bravery and courage by members of the emergency services, other passengers and members of the public.
"London's emergency plans have been tested, practised and refined, but on July 7 it was clear that they ignored the needs of many individuals caught up in the attacks.
"They focused on incidents but not individuals, and processes rather than people. It is vital that these plans are reviewed and updated to address this major issue.
"In November we will be asking the authorities for progress work on the recommendations we have made and want to see some significant changes. If not, we will certainly be asking why."
The report revealed that radios used by most blue-light emergency services still did not work underground, despite recommendations made 18 years ago in the wake of the King's Cross fire.
The report concluded: "The plans, systems and processes intended to provide a framework for the response to major incidents in London must be revised and improved.
"Communications within and between the emergency services did not stand up on July 7."
The report added: "It's unacceptable that the emergency services, with the exception of the British Transport Police, are still not able to communicate by radio when they are underground."
The committee said there was "no excuse" for failing to rectify this by the end of next year.
As a result of the communication breakdown, some emergency services personnel at the blast site could not communicate with each other or in some cases even with their control rooms.
The report estimated that at least 1,000 adults and 2,000 of their children were likely to have suffered from post-traumatic stress as a result of the bombing.
A further 3,000 others had been directly affected, it said.
"The majority of them are still not known to the authorities, are not part of any support network of survivors and have been left to fend for themselves," the committee concluded.
There had been no systematic establishment of survivor reception areas, so many had simply left the scenes without having given their personal details to anyone.
The report added: "The failure to plan for the care of hundreds of people who are likely to have suffered psychological trauma having survived the July 7 explosions is completely unacceptable."
Phil Woolas, from the London Resilience Partnership, said lessons would be learned from the Assembly's recommendations.
The London Resilience Partnership was set up after the September 11 terror attacks in New York and represents London's key emergency services.
It oversees strategic emergency planning in the capital and designed practice emergency plans.
Mr Woolas said: "The sheer scale and unique nature of events on 7 July mean that naturally there will be lessons to learn about our response.
"Some issues have already been recognised and acted upon, such as communications systems and problems with radios underground.
"We shall study the report's recommendations closely and take on board any additional lessons, whilst never forgetting the professionalism and individual acts of heroism that characterised London's response to the bombings."
The report, which followed a six-month investigation, also criticised the setting up of the casualty bureau for the thousands of people who were worried about missing loved ones.
The bureau had been set up "too slowly" because of an avoidable error and this had caused great distress to many people who were trying to track down friends and relatives, it said.
The committee said the bureau should not have been a profit-making venture for any telephone company but recognised that the profits from the "0870" national rate telephone number had been donated to charity.
The chaotic aftermath of the July 7 bombings had also exposed London Ambulance Service's "lack of capacity" to deliver equipment and medical supplies to the scene of a major incident at multiple sites.
"As a result of this, there was a lack of basic equipment, such as stretchers and triage cards, and a lack of essential supplies such as fluids at the affected Tube stations and at Tavistock Square (the scene of the bus bombing)," the report concluded.
It also said there had been a "general failure" to maintain records of the emergency services' response to the bombings.
The committee also said the authorities ought to have known that the mobile phone network would become congested in the aftermath of such a major incident, yet the emergency services still relied on mobile phones to communicate between their senior staff.
This had led to "major communication problems" on the day, the report found.
There was an "urgent need" for a wholesale review of how senior officers within the emergency services communicated with each other.
The report made a series of recommendations on the lessons to be learned from the attacks and scheduled a follow-up review for November this year when the committee said it would ask for a progress report from the authorities involved.
Four suicide bombers killed themselves and 52 innocent people on July 7 when they detonated rucksack bombs on three Tube trains - close to Aldgate, Edgware Road and Russell Square - and on a bus in Tavistock Square.
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