The Metropolitan police was today found guilty of a catastrophic series of errors during the operation that led to firearms officers shooting Jean Charles de Menezes dead on the London underground.

The force was fined £175,000 and ordered to pay £385,000 costs after an Old Bailey jury found it had breached health and safety rules and failed in its duty to protect members of the public in the killing of the innocent Brazilian electrician at Stockwell station, south London, on July 22 2005.

De Menezes was shot seven times in the head by police who mistook him for one of four men who had failed to detonate bombs on the capital's transport system the previous day, the court heard during the four-week trial.

The prosecution alleged that the police operation to follow and stop the 27-year-old - who lived in the same south London block of flats as the terror suspect Hussein Osman - was carried out "so badly that the public were needlessly put at risk".

The Met denied a single charge of breaking the Health and Safety at Work Act 1974, which requires an employer to ensure the safety of non-employees. It had faced a maximum sentence of an unlimited fine.

The Met commissioner, Sir Ian Blair, said after the verdict that he would not be resigning and would go back to New Scotland Yard to "get on with my job". The prime minister, Gordon Brown, and the home secretary, Jacqui Smith, said Sir Ian retained their "full confidence".

In a highly unusual move, the judge, Mr Justice Henriques, allowed the jury to insert a rider, or caveat, into the verdict stating that Cressida Dick, the commander in charge of the operation on the day, should not be held personally culpable for the events.

The judge called the case a "corporate failure, not an individual failure". He said it was hard to decide the appropriate fine because "any costs to the police is a cost against a police officer on the streets".

"This was very much an isolated breach brought about by quite extraordinary circumstances. One person died and many others were placed in potential danger," the judge said.

Sir Ian was in court to hear the guilty verdict delivered. Afterwards he gave a statement in which he expressed his "deepest regret" over the death of De Menezes.

The Conservatives and Liberal Democrats said he should resign. "This guilty verdict makes it unavoidable that Ian Blair should take responsibility on behalf of his whole organisation and resign," Nick Clegg, the Liberal Democrat home affairs spokesman, said.

The Tory home affairs spokesman, David Davis, described Sir Ian's position as "untenable".

Len Duval, the chairman of the Metropolitan Police Authority, said much work had been done to improve the force's procedures since the killing.

During the trial, the jury heard that a surveillance officer was "relieving himself" just as De Menezes left his home for the last time, and this meant an opportunity to identify him was missed. To complicate matters, a specialist firearms unit, SO19 - since renamed CO19 - had been called to detain suspects but had not arrived.

One special branch officer, known in court as Alan, told the jury he believed the delay was "totally unacceptable" given that specialist units were told they were needed at 5am but had not been in position until 9.30am.

That meant surveillance officers were told by superiors in Gold command to wait for specialists to arrive - in the apparent but ultimately mistaken belief that they would be in place before De Menezes entered Stockwell station.

Commanders twice changed their minds about who should move in on the suspect, the court was told. CCTV footage played to the court showed De Menezes walking down an escalator to the platform. Moments later, firearms officers arrived and shot him.

Crucial to the case was evidence concerning whether the police's shoot-to-kill command - a codeword, Kratos - was ever given. Ms Dick, who has since been promoted, said she had only issued a command to "stop" De Menezes, implying a "conventional challenge" by armed officers.

The prosecution sought to portray the police operations room as chaotic.

Ronald Thwaites QC, defending, claimed De Menezes had been killed because he acted in an "aggressive and threatening manner" when challenged by police.

He claimed the Brazilian could have failed to comply with officers because he thought he had drugs in his pocket - the court heard traces of cocaine were found in his urine - or because he had a forged stamp in his passport.

However, Clare Montgomery, prosecuting, told the court De Menezes had been acting no differently to "hundreds of others" when he was gunned down.