Ardern, on behalf of the Government, Police Commissioner Andrew Coster, and the head of the Security Intelligence Service, Rebecca Kitteridge, each apologised for the failings.
After accepting the report, the Government set out steps to directly address nine recommendations alongside other measures to address more issues raised in the report.
Cabinet agreed Andrew Little would be the minister accountable for implementing the recommendations due to his current GCSB and SIS portfolios and his previous experience as Justice Minister.
Ardern acknowledged the public consultation needed to implement some of the recommendations, especially around firearms, hate speech and beefing up security agencies could result in minority groups being further marginalised.
But she said she hoped New Zealand could have the conversation in a way "that it doesn't cause further harm".
"Every political party, I would hope in this Parliament, wants New Zealand to be a safe place. I would also hope that every political party in this Parliament wants New Zealand to be an inclusive place.
"We have to find a way to have this discussion in such a way that we achieve both goals so I'm not going to shy away from the need for us to talk about whether or not our intelligence and security system is doing what it requires to keep us safe, and has the public permission to do that.
"We can't shy away from that, but we also must be careful in having it that we do not alienate, we do not stigmatise, we do not stereotype and that is the challenge that lies in front of all of us."
The report itself called for "cross-government actions to improve social cohesion and how we embrace diversity".
"We accept political engagement on these issues will not be easy. But facing up to the hard issues and having open public conversations are critical."
Speaking on a Government motion in the House noting the report, Ardern said she did not want the report's response to be political and would work to build cross-party consensus.
National leader Judith Collins said there was a lot of information in the report that needed to be "absorbed and considered" and the Opposition would scrutinise the recommendations over the coming months.
But Collins signalled National could oppose some of the firearms recommendations if the regulations burdened "law-abiding citizens".
Speaking to reporters outside the House, Collins said there would need to be a "very compelling reason" to move hate speech from the Human Rights Act into the Crimes Act.
"We would need to be very careful. As a party we certainly would not support people being criminalising for unwise statements when they basically should have been spoken to."
Collins, a former Police Minister, refused to take responsibility for inaction on firearms regulations while National was in power. The report said the threat a terrorist could take advantage of loose controls on semi-automatic firearms was first identified in 2011.
"I supported the select committee inquiry," said Collins.
"But that portfolio was removed from me and given to Paula Bennett, so absolutely not."
Act leader David Seymour said there needed to be "practical and honest solutions" to the problems, not knee-jerk reactions and the Government couldn't just create new agencies without holding its current ones to account.
In the House Seymour said he didn't want to mention firearms in the debate but as Ardern had raised them herself said "nothing has been more divisive" in his six years in Parliament than the "rushed" firearms regulations.
Changes the Government will seek to make quickly
Today the Government announced a number of specific changes it will implement in response to the Royal Commission's findings:
• Placing Minister Andrew Little in charge of co-ordinating the Government's response to the report and implementation of its recommendations.
• Establishing a Ministry for Ethnic Communities to support the work programme on social cohesion.
• Establishing a new agency within police called Te Raranga, The Weave, which will respond to alleged hate crimes.
• Extending the Safer Communities Fund so communities at risk of hate crime can upgrade their security arrangements.
• Creating and Ethnic Communities Graduate Programme in the public service.
• Establishing a National Centre of Excellence to bring together academia, civil society and Government to research radicalisation and violent extremism and social cohesion in New Zealand.
• Amending the Terrorism Suppression Act to strengthen counter-terrorism legislation.
• Creating an early intervention programme to develop wrap-around support for individuals who show early signs of radicalisation. This will be led by police.
• Continuing to work on ascension to the Budapest Convention on cybercrime.
