The report, written by consultant Geoffrey Price and confirmed by former Islington LBC chief executive Eric Dear, found that a breakdown in communications within the authority led to significant delays in the billing process for work done between 1988 and 1992.
The situation was compounded by the failure to ensure that the notice given to lessees in respect of major works fulfilled all the legal requirements.
But Westminster insists no action will be taken against current or former officers.
The Labour Party seized on the report. Shadow local government minister Hilary Armstrong said: 'This report highlights the gross mismanagement taking place behind the closed doors of this Tory flagship council.
'The report's terms of reference were determined by the council. What the public now want is an investigation looking at the involvement of councillors and the link between the homes for votes scandal and the failure to bill these leaseholders.'