Police conceded on Wednesday that they “should have gone in earlier” rather than waiting to act until the gunman had killed a hostage.
It follows the report of New South Wales coroner Michael Barnes, who said the police made a series of mistakes after Man Haron Monis took control of the Lindt Cafe on 15 December 2014.
Monis, who took 18 hostages, was eventually shot dead by police, but only after he had killed cafe manager Tori Johnson.
Another hostage, lawyer Katrina Dawson, was killed in the crossfire.
Hostages and families of the victims have long questioned why police waited nearly 17 hours to enter the cafe and end the attack.
“An emergency action should have been initiated following the first shot of Monis at 2:03 am,” the coroner said.
“That made it clear there was little to no chance of resolving the siege, and those within the cafe were at an extreme risk of harm,” he added.
“The 10 minutes that lapsed without decisive action by police was too long. Tori Johnson was executed in the meantime.”
In the 500-page report, Mr Barnes praised the bravery of the security services, underlining that the only person responsible for the deaths was Monis himself.
“I cannot stress too heavily that the deaths and injuries that occurred as a result of the siege were not the fault of police. All the blame for those rests on Man Monis,” he said.
“He created the intensely dangerous situation. He maliciously executed Tori Johnson. He barricaded himself in a corner of the cafe, and his actions forced police to enter the cafe in circumstances where the risk of hostages being wounded or killed was very high,” he added.
“Monis deserves to be the sole focus of our denunciation and condemnation.”
Mr Barnes said police had followed correct procedure by trying to negotiate with the gunman, but that alternatives should have been considered.
He said a psychiatrist called in had given an erroneous assessment of the situation to police, making them underestimate the threat.
After the coroner’s report was published, one person involved in the siege, Louisa Hope, said “it is really a wonderful thing that this is over now”.
“As we all try and negotiate living in this new age of terror, we all need to consider new things in new ways,” she told reporters.
“As a community we all come together and support our police. There are things to be reviewed and considered and it’s nothing to be afraid of.”
Mr Barnes determined that, while Monis was not psychotic, he did have a severe personality disorder.
And although the extent of any affiliation with Islamic State is still unclear, Monis’ actions were “within the accepted definition of terrorism”.
The coroner’s report also highlights the inadequacy of prosecutors and the Australian Security Intelligence Organisation, who should have kept Monis off the streets as someone who had “the potential to incite others to violence”.
Apart from being arrested and granted bail on multiple sex offences charges, he had also been flagged by the FBI.