The police minister, Nick Herbert, has tried to calm fears that the police may adopt new tactics of shooting arsonists with live ammunition in any future riot.

Herbert confirmed to MPs that police chiefs were in talks with Home Office ministers about buying water cannons to use for the first time in the UK outside Northern Ireland, and about using plastic bullets.

After the publication of the official inquiry report into police tactics in the summer riots, the minister said the legal power for police to shoot arsonists who seriously endangered life by setting fire to shops with occupied flats above did exist.

But he said the idea was contained in a legal annexe to the riots report by Her Majesty's Inspectorate of Police Constabulary (HMIC), in which a leading barrister, Timothy Otty QC, outlined the legal options for police in dealing with disorder.

"To suggest that the Her Majesty's Inspector of Constabulary has recommended this today would be to go too far," Herbert said.

The legal annexe outlines several scenarios in which lethal force could be used, including when cars are being driven directly at officers and when firearms are directed at police officers. It adds that arson attacks on commercial buildings linked to residential homes would also constitute a threat to life and justify the use of force.

Otty said the use of plastic bullets against individuals, water cannon to disperse a crowd and "potentially the use of firearms" would also be justified as a last resort. The use of firearms with live ammunition could be justified against arsonists when life is being endangered given the "immediacy of the risk and the gravity of the consequences", says the legal annexe.

The HMIC report, commissioned by the home secretary, says serious consideration needs to be given to the use of water cannon and plastic bullets as part of a radical shift in police tactics to deal with public disorder. It concludes that the police in many cities were not well prepared for the "widespread, fast-moving and opportunistic criminal attacks on property" seen during the August riots.

The review says the lack of equipment and the number of officers deployed hindered the police response. Some forces ran out of shields and some police vehicles lacked reinforced glass or steel grilles.

Sir Denis O'Connor, the chief inspector of constabulary, said an evolutionary version of the summer riots was likely to be seen again and more robust tactics would be needed. "Police estimate that they need to outnumber rioters between three and five to one if they are to make arrests and disperse groups – this meant that arrest tactics were impossible in some circumstances," he said.

The report says some police commanders erred on the safe side in using less forceful tactics, standing their ground rather than going forward to tackle disorder.

O'Connor's call for a public debate on the use of water cannon and plastic bullets comes as the Metropolitan police consider buying three water cannon at a cost of nearly £4m. It follows a warning this week from the Commons home affairs committee that the use of water cannon and plastic bullets would be indiscriminate and dangerous.

The report also raises the prospect of calling in the army, saying that option is being explored at a senior level, but adds that it is difficult to see how the use of a military level of force would be justified.

It says water cannon are valuable at predictable sites and offer a lower level of force than other options, but have much more limited value in a fast-moving situation. It says they need to be used in pairs for effective control, require protection of police support unit officers and ready access to a water supply.

It acknowledges that the 1999 Patten report was critical of the use of plastic bullets in Northern Ireland but says since then technical changes have improved the accuracy of the weapon and reduced the physical injury caused by the round. Since 2005, plastic bullets have been fired during 60 firearms incidents outside Northern Ireland.

The HMIC raises the use of water cannon and plastic bullets once rioters have started to erect barricades and started to throw missiles.

O'Connor said: "Although their initial response was hesitant, the police regained control of the streets and brought the summer disorders to an end. The approach to restoring order needs to change to enable a speedier, self-assured response where the threat to the public demands it."

The report says five people died in the riots with many more hurt, including 300 officers, in unrest which spanned 20 police force areas. It suggests the 1981 inner city riots were on a larger scale with more officers injured.

Shami Chakrabarti, director of the human rights campaign group Liberty, said of the potential shooting of arsonists: "The police have always been able to use violent force to save lives in extreme situations. No new power or strategy is required for that to remain the case.

"But how on earth would bullets have quelled and not inflamed this summer's riots? Didn't the widespread disorder all begin in Tottenham with a fatal police shooting?"