The verdicts, delivered after a tortuous seven-week trial, represent a triumph for the defence and political embarrassment for the prosecution and for the Clinton administration. Five of the cult members were none the less found guilty of voluntary manslaughter and face jail sentences.
The case centred on the original assault launched by a force of 75 agents of the Alcohol, Tobacco and Firearms (ATF) bureau on 28 February last year against the cult's compound, known as Mount Carmel, in Waco, Texas. In the first clash, four members of the ATF team were killed in gunfire. Six Davidians also died.
That incident led to a 51- day stand-off between the authorities and the cult, led by the self-described Messiah, David Koresh. It ended on 19 April last year when ATF officials attempted to puncture the walls of the Waco compound with tanks and pump in tear-gas, triggering a massive inferno that killed 79 of those inside, including Koresh.
The not-guilty verdicts threaten to undermine the entire foundation of the administration's public justifications for the tactics used against Koresh and his followers. The initial claim, made both by President Clinton and Janet Reno, the Attorney-General, that child abuse was taking place inside the compound, still has not been proven.
Last autumn, a report issued by the Treasury Department, of which the ATF is a part, was scathingly critical of ATF strategies. It suggested ATF leaders had gone ahead with the initial raid on the compound, called to serve weapons search warrants, even though they knew that the Davidians knew it was going to happen and were prepared for it.
Yesterday's result is likely to open the flood-gates to claims for compensation against the government from former residents of Mount Carmel, of which no trace now remains, and in particular from relatives of those who died. The different cases could occupy courts in America for years.
Defence lawyers argued that the Davidians acted in self-defence against the ATF assault. Critical to the case was the recording of a telephone call placed by one of the Davidians to the emergency services as the raid began. On it Wayne Martin, a Harvard-educated laywer who later perished in the April conflagration, pleaded for an end to the attack and screamed: 'We're under fire]'
Prosecutors looked shocked as they emerged from hearing the verdicts. 'This case shows that the systems works,' assistant US attorney Bill Johnston commented gravely. But barely able to hide his disappointment, he added: 'These fine agents deserve the best and I just hope we did all we could.' A second prosecutor remarked: 'You cannot second-guess the jury. They didn't see the evidence the way we did and that's their prerogative.'
Since the release of the Treasury department's report, the former head of the ATF, Stephen Higgins, has been replaced along with five of his most senior agents.
Most damaging was the finding that in the initial hearings into the Waco episode, ATF agents had lied to investigators about the circumstances of the first raid and tried to cover up for one another.
The Treasury report, has been made required reading for all new ATF agents. Above all, the credo now is to avoid physical confrontation in a situation as in Waco unless it becomes absolutely necessary.
Just as the government tried to paint the most devilish picture possible of David Koresh at the time of the final conflagration, so did the prosecution in summing up their case last week.
They compared the former Davidian leader to Hitler and Stalin and blamed those who were faithful to him, 'because they misjudged the zeal and murderous intent of these people that followed a man named David Death'.