The former defence minister, Peter Reith, deliberately misled the public during last year’s federal election campaign, a Senate inquiry into the “children overboard” affair has found.

The majority report also found the Government failed to correct the public record before the November 10 election – despite repeated navy and Defence Department advice to the Prime Minister, John Howard, Mr Reith and their offices that initial reports of asylum seekers throwing children overboard were false.

The findings, released last night, were fiercely denounced by Government Senators involved in the inquiry, who said they were unsupported by evidence.

Mr Reith also issued a strong defence of his actions, which first came to the public’s attention on October 7.

It was then that the Immigration Minister, Philip Ruddock, told the media that people on board the vessel, known as SIEV 4, had thrown their children into the sea – claims to which Mr Howard referred repeatedly in the days following.

Three days later, Mr Reith released photographs purporting to support the claims, but the pictures of children in the water were later revealed to have been taken when the vessel sank on October 8.

Senator John Faulkner, Labor, said the committee had exposed “an extraordinary story of deceit” and said the Government owed Australians an apology.

“The committee has established on no less than 13 occasions that the Prime Minister, his department, or his office were informed that children had not been thrown overboard, or that photographs purporting to represent that event were false,” Senator Faulkner said.

“The committee has also found that on no less than 14 occasions the minister for defence at the time, Mr Peter Reith, or his office had been informed that children had not been thrown overboard from SIEV 4 or that the photographs of people in the water represented that event.”

The committee heard 15 days of evidence, beginning in March, but failed to take evidence from Mr Reith, whom it declined to summons. It also did not question key figures such as his media adviser, Ross Hampton, his military adviser, Mike Scrafton, or the Prime Minister’s international adviser, Miles Jordana.

Partly because of this, the committee said it was unable to establish what the Prime Minister knew about the falsity of the “children overboard” claims.

On the controversy surrounding the sinking of the so-called SIEV X, in which 352 boatpeople drowned, the committee said it found no grounds for believing that dereliction of duty was committed by Australian agencies.

But the majority report – dominated by Labor and Democrat senators – said it was disturbing that no review of the SIEV X episode was conducted in the aftermath of the tragedy.

The overloaded, unseaworthy vessel sank between Indonesia and Christmas Island on October 20, the day the Australian Federal Police became aware it was en route – information that did not reach Defence surveillance agencies.

The committee found it “extraordinary that a major human disaster could occur in the vicinity of a theatre of intensive Australian operations and remain undetected until three days after the event, without any concern being raised within intelligence and decision-making circles”.

Other figures who came in for heavy criticism included the former Chief of Defence Force, Admiral Chris Barrie, who the committee accused of failing to ensure Mr Reith knew an error had been made.

The committee also said there was a “serious accountability vacuum” in ministers’ offices and it was “deeply disturbed” by the actions and omissions of Mr Reith’s staff in the handling of the children overboard affair.

It made a number of recommendations, including that there be a full independent inquiry into allegations of possible involvement of Australian authorities in the disruption or sabotage of people smuggling boats from Indonesia.

It recommended a code of conduct for ministerial staffers, and that the Chief of the Defence Force and the Secretary of Defence jointly develop protocols to guide future ministerial directives concerning public communications.