The Ministry for Primary Industries accepts it made flawed decisions in deciding not to prosecute fishing boat skippers after investigating the dumping of quota fish at sea.
The comments come after the ministry's director general, Martyn Dunne, received a report on the matter by former solicitor-general Michael Heron QC.
The ministry set up an independent inquiry in May into claims it did not prosecute skippers for dumping fish, despite having video footage.
It followed an investigation into illegal dumping, codenamed Operation Achilles.
This investigation looked at operations by fishing vessels in 2012 and found quota fish were discarded by five of the six ships.
A decision was made not to prosecute and the skippers received a warning.
View one of 12 videos obtained as part of Operation Achilles:
Mr Heron's report said this decision was flawed, and was characterised by a process that was described as confused, not well documented and not well communicated.
The time limit for a prosecution has since passed.
The report said the warnings the skippers received were supposed to be a line in the sand, but this process was not achieved and the law remained confused on this point.
Mr Heron also looked at two other cases.
One was an investigation into fishing in 2003, dubbed Operation Overdue.
This was largely cleared of blame, despite what the report called initial errors.
Another investigation, Operation Hippocamp, was also looked at, and was not significantly faulted.
But Operation Achilles was seriously criticised, and Mr Dunne pledged to take several steps to fix the issues it raised.
These included reviewing prosecution policies along with Crown Law and making existing practises clearer and more formalised.
The original investigations were based on fears that skippers were dumping dead fish back into the ocean if they were not the prime target species being sought by the trawling operations.
Despite these fish not being wanted by the fishing crew, they were protected species under the quota management system, and either should not have been caught or should have been accounted for under quota rules.
Ministry 'captured by the fishing industry'
A spokesman for recreational fishers' group LegaSea, Scott Macindoe, said the inquiry had shown that the ministry had failed.
"It's captured by the fishing industry. The minister is continually receiving poor advice. This is the latest evidence of a ministry that is refusing to follow the law as it is prescribed.