According to the newspaper, the report, expected to be released this week but already sent to the departments and agencies involved, recommends sweeping changes to the Australian Federal Police, immigration intelligence and the country's anti-terrorism laws.
The inquiry has also suggested to defer the cancellation of Dr Haneef's visa and his deportation, the newspaper reported.
The report is critical of the prosecution case against Dr Haneef, identifies failures of criminal intelligence, and recommends a standing review of the anti-terrorism laws and sweeping controls for the Australian Federal Police the intelligence services in relation to immigration.
But the report, commissioned by the present Labor government of Prime Minister Kevin Rudd, has cleared the previous Howard government of any improper behaviour, conspiracy or political motivation in ordering the detention and later deportation of the Indian doctor from the Gold Coast in July last year.
While finding flaws in the actions of the Commonwealth Director of Public Prosecutions, the former immigration minister Kevin Andrews, the Department of Immigration and the AFP, the report finds there was no conspiracy nor political motivation in the decision to cancel Dr Haneef's Australian work visa and send him back to India after the terrorism charges against him were dropped, the newspaper reported.
Former New South Wales supreme court judge John Clarke, who headed the inquiry, has recommended there should be clearer guidelines for laying terrorism charges and more cooperation between the police and intelligence agencies.
Clarke finds Andrews did not reflect deeply enough on the Immigration Department's advice about Dr Haneef, but finds he was never given the Australian Security Intelligence Organisation's report on the case by his department.
Andrews was criticized last year for his decision to detain and then deport Dr Haneef, "in the national interest", after the terrorism charges against the doctor were dropped. The Howard government was accused of racism and scaremongering over the case.
The ASIO's report on Dr Haneef - who was detained after the SIM card from his mobile phone was linked to his cousin, Kafeel Ahmed, who died after being burned in a failed terror attack at Glasgow airport - said the intelligence agency did not have any material linking the Gold Coast Hospital doctor to terrorism, but stated the AFP was in charge of the case.
The trials of the other accused over the British terror attacks resulted last week in the conviction of Iraqi doctor Bilal Abdullah and the acquittal of his co-defendant, Mohamed Asha, a Jordanian neurologist.
OneIndia News (With inputs from Agencies)