London's Metropolitan Police force was found guilty on Thursday of breaching health and safety laws in the fatal 2005 shooting of a Brazilian who officers mistook for a suicide bomber.
The ruling prompted calls for the resignation of police chief Ian Blair, Britain's most senior police officer, who insisted he would not quit, saying officers did their best in a "simply extraordinary situation."
Jean Charles de Menezes, 27, was shot seven times in the head at a London Underground train station on July 22, 2005, with the city still reeling from attacks on the public transport system that killed 52 people two weeks before.
His death came the day after another attempted attack was foiled and police believed de Menezes was Hussain Osman, one of the plotters in that case, who was jailed for life earlier this year.
Prosecutors had argued that de Menezes and members of the public were put at risk because he was allowed on two buses and an underground train while under police observation before being shot dead.
After a jury at London's Central Criminal Court returned its verdict, judge Richard Henriques fined the police force ?175,000 (US$364,000) and ordered it to pay costs of ?385,000.
The Brazilian foreign ministry praised the verdict, saying it had shown the police's "responsibility," and said it "opens the way for new initiatives in favor of the family of the innocent Brazilian citizen."
De Menezes's family, meanwhile, pledged to keep working for justice.
His cousin Alex Pereira said that a guilty verdict was "not enough."
"Those responsible for his death must be held accountable ... we won't stop the fight to obtain justice," he said, calling for a full investigation.
The court decision prompted calls from Britain's two main opposition parties for the police chief to step down in the wake of the affair, while British newspapers vociferously argued that he should offer his resignation.
"Would he show contrition, offer an apology perhaps for such an unmitigated catastrophe?" the Daily Mail wrote in its editorial. "Would he do the proper thing and resign? Not a chance. Until he goes, London's police force cannot hope to restore its good name."
Blair said he would not respond to the calls for his resignation, however, telling reporters outside court that he intended "to continue to lead the Met in its increasingly successful efforts to reduce crime and deter and disrupt terrorist activities."
The force had denied breaching health and safety laws during the month-long trial during which prosecutors alleged a series of "catastrophic" errors of judgment and 19 key failings on the day.
Blair said the force was "unlikely" to appeal against the verdict.
Deputy Assistant Commissioner Cressida Dick, who was in charge of the operation, told the court she had told officers to "stop" de Menezes, meaning challenge or detain, and did not instruct them to shoot him.
She was specifically cleared of wrongdoing by the jury.
The operations room at the time was noisy and chaotic, with officers struggling to hear radio transmissions from the scene, the prosecution said.
A spokesman for British Prime Minister Gordon Brown said he retained confidence in Blair, while Home Secretary Jacqui Smith said he and the force had "my full confidence and our thanks and support in the difficult job that they do."