The Manchester bomber who killed 22 people at an Ariana Grande concert in 2017 might have been stopped if Britain's MI5 security service had acted on vital intelligence, an official inquiry found Thursday.

Delays in relation to one of two pieces of intelligence led to the "missing of an opportunity to take a potentially important investigative action", inquiry chairman John Saunders said in his report.

The attack, as concert-goers were leaving the show at the Manchester Arena in northern England, was carried out by 22-year-old Salman Abedi, who was from Manchester but of Libyan descent.

Inspired by the Islamic State group, he targeted crowds of mostly young people who had been attending the concert by the US pop star.

The youngest victim was aged eight. Others included parents who had come to pick up their children.

Saunders, a retired high court judge, presented his third and final report into the incident.

"Based on everything the (MI5) Security Service knew or should have known, I am satisfied that such an investigative action would have been a proportionate and justified step to take.

"This should have happened," he said referring to the failure to immediately write up a report on one of the pieces of intelligence.

"Although I accept that Salman Abedi demonstrated some security consciousness and that this might have affected the efficacy of the investigative action that I have identified, there was the real possibility that it would have produced actionable intelligence."

Richard Scorer, a lawyer who represented 11 of the families at the inquiry, said that Saunders had revealed agonising missed opportunities.

"As a result of these failures, at the very least, a real possibility of preventing this attack was lost. This is a devastating conclusion for us," he said.

"The failures exposed in this report are unacceptable."