The lack of close surveillance by agents allowed them to use a van to plough through pedestrians on the bridge before going on a knife rampage. They were shot dead by police.
In a 46-page report into the attack, Judge Mark Lucraft QC found that the suspension of a priority investigation such as this one was a "matter of legitimate public concern".
The coroner, who presided over the six-week inquest into the victims' deaths, said: "It is possible that, but for that suspension, further useful intelligence about Butt would have been obtained, including more information about his links to the other attackers."
The coroner made 18 recommendations emergency services and other government agencies are urged to adopt. He also called on the Government to introduce laws making it easier for police to make arrests for possession of terrorist propaganda.