Lionel "Buster" Crabb vanished while spying on Soviet warships visiting the city at the height of the Cold War.
The frogman's fate has remained one of the country's most closely-guarded secrets, but the BBC has obtained the report into his final mission on 19 April, 1956.
The secret document was the subject of a Freedom Of Information application by BBC Radio Solent.
It shows that Crabb's intelligence service handlers did not take proper precautions to protect him or the secrecy of the mission.
When he failed to reappear they decided not to carry out a full search for fear of alerting the crew of the cruiser Ordzhonikidze which had brought Nikita Khrushchev on a diplomatic visit.
Lomond Handley, from Poole in Dorset, is one of the few living relatives of Commander Crabb, whose wartime exploits in the Mediterranean featured in the 1958 film, The Silent Enemy.
After reading the report, she said: "This was a spying mission which went ahead despite the prime minister forbidding it and when the operation went pear-shaped they did nothing seriously to get him back.
"They acted very carelessly at best and at worse callously. They abandoned him. They left him to his fate, which to me is absolutely horrendous after all that he had done for his country.
"It was a bungled operation, planned without sufficient thought, because those in charge failed to apply their minds to the consequences should it go badly wrong."
Crabb was well-known for his actions in World War II. He received the George Medal for removing Italian limpet mines from British warships at Malta and an OBE for mine clearance at Livorno.
When his disappearance was noticed, the Admiralty said he had been killed while working on an experimental mine in Stokes Bay, a few miles away from Portsmouth Harbour.
The lie was exposed when the Soviets revealed that a frogman had been seen to surface close to their ship.
Crabb was promptly disowned by MI6 which ran the operation for the Director of Naval Intelligence and the Admiralty.
Ms Handley said: "Crabb was said to have exploded an experimental mine killing himself. Then it was falsely claimed that he was examining the hull of the Soviet ship without any authority whatsoever.
"It's now clear that he was under orders. Those are two examples of the lies which the authorities told and expected the public to believe."
The report by former cabinet secretary Sir Edward Bridges shows that the prime minister, Anthony Eden, remained unaware of the mission and its failure for 15 days.
During that time two of the country's top civil servants were told.
The permanent under secretaries at the Admiralty and the Foreign Office both knew, but neither would accept responsibility for the operation, and neither was prepared to inform their minister before the other had been told.
Headless body
Ms Handley said: "It stinks. It's absolutely appalling that politicians, particularly the prime minister, were not told what was going on.
"They were more concerned with covering their own tracks than actually saying "look, we've made a mistake, something awful has happened, we don't know what to do".
"It sounds like something from "Yes Minister".
A headless, handless body was washed up near Chichester 15 months later.
Crabb's former diving partner, Sidney Knowles, identified the body as his former friend, but this year he admitted that he did so under orders, and has always doubted that the man buried in Portsmouth's Milton Cemetery is Buster Crabb.
The identity of the body is the subject of an ongoing investigation by BBC Radio Solent.
