Greater Manchester police have been forced on to the defensive after it emerged that a man suspected of murdering two unarmed police officers in a surprise attack was arrested but released on bail in June.

Fiona Bone, 32, and Nicola Hughes, 23, were attending what was believed to be a reported burglary in Hattersley, Tameside, on Tuesday morning when they were fatally injured by gunshots and a grenade blast. Hughes's parents, Susan and Bryn, and her brother Sam paid tribute to their "very caring and loving girl".

"Nicola was only 23 years old and had the whole of her life in front of her," they said in a statement. "We cannot express how we feel today except to say we have always been exceedingly proud of Nicola and always will be. She knew she was loved by us all and we shall all miss her dreadfully."

Police were continuing to question Dale Cregan, 29, on Wednesday. Cregan walked into a police station in nearby Hyde and was arrested on suspicion of the two officers' murders, as well as those of a father and son who died in separate attacks earlier this year.

The force has confirmed that Cregan, whose face was plastered across billboards throughout the area during a huge manhunt, had been arrested in connection with the fatal shooting of Mark Short, 23, in a pub in Droylsden on 25 May. He was detained at Manchester airport on 12 June after returning from a holiday in Thailand, police said, and was questioned and subsequently released on bail.

Short's father, David, was killed at his home in Clayton, Manchester, on 10 August. Two men have been charged with his murder, while four others have been charged with that of his son.

On Wednesday, the force's chief constable, Sir Peter Fahy, issued a statement defending the decision to bail Cregan. "It is absolutely normal in the course of complex crime inquiries that when people are arrested there are occasions where there is insufficient evidence available for them to be charged," he said.

"In those circumstances suspects have to be released on bail as there are strict time limits covering how long suspects can be held in custody without charge. That is exactly what happened in this case."

The Home Office has said that the home secretary, Theresa May, is on her way to Manchester to meet Fahy.

The unprecedented attack – the first time that two female police officers have been killed in the line of duty – has prompted calls for the death penalty to be restored. "Bring back hanging," the father of Bone, Paul, told the Daily Telegraph. "Let policemen shoot people on sight. I am just so completely shocked. She was such a lovely girl. I can't even bring myself to think about the wedding." The young constable, who had five years' police service, had been about to enter a civil partnership.

Lord Tebbit, the former Conservative party chairman, also said in the Telegraph it was time to think again of the "deterrent effect" of a death sentence. "I have kept track year by year since the death penalty was suspended then abolished of the number of people who have been killed by persons previously convicted of homicide," he writes. "It has averaged three people a year. About 150 people killed because their killers have been freed to kill again. I think it is time we thought again about the deterrent effect of the shadow of the gallows."

Bone and Hughes were responding to a routine callout in Hattersley when they were caught in a trap.

As they arrived at a property in Abbey Gardens where a burglary had been reported, the officers came under fire from bullets and a grenade.

Within an hour, Cregan is believed to have walked into the police station in Hyde.

A minute's silence was held by Greater Manchester officers at 11am, including by those at the scene of the attack. With heads bowed, colleagues of the dead women stood behind the police cordon. One could be seen wiping away tears.