The BBC "unreservedly" apologised last night for broadcasting a series of reports claiming money raised by Live Aid to fight famine in Ethiopia was spent on weapons.
The corporation admitted in an on-air apology it had "no evidence" for the claims which prompted a complaint from Band Aid Trustees including Bob Geldof.
An edition of Assignment, broadcast on the World Service last March, initially reported aid had been diverted by a rebel group in the beleaguered African country to buy guns.
That story was subsequently followed up online and on programmes including From Our Own Correspondent and the BBC News which named Live Aid and Band Aid as the source of the misdirected funds.
An apology broadcast on the World Service yesterday said: "Following a complaint from the Band Aid Trust, the BBC has investigated the programme.
'The investigation has concluded that the programme's evidence did not relate to money raised by Band Aid and Live Aid. However, the programme gave the impression that large amounts of Band Aid and Live Aid money had been diverted.
'The BBC wishes to apologise unreservedly to the Band Aid Trust for this misleading and unfair impression.
'The BBC also wishes to apologise unreservedly to the Band Aid Trust for a number of reports on television, radio and online which went further than the programme itself in stating that millions of pounds raised by Band Aid and Live Aid had been diverted to buy arms.
'The BBC had no evidence for these statements, and they shouldn't have been broadcast."
The corporation also apologised to Geldof after it "unfairly" said he refused to comment on the story because it was too sensitive.
Geldof welcomed the move but warned the BBC's "misleading and unfair" coverage could damage public faith in charity campaigns.
He said: "This was an unusual lapse in standards by the broadcaster and, most critically, the World Service.
'It was Michael Buerk's frontline reports for the BBC from Ethiopia which prompted me to act and establish Band Aid in the first place and I recognise the important journalistic and humanitarian role the BBC has played in our story.
"On behalf of all those members of the public who have so magnificently donated to Band Aid and Live Aid over the last 26 years, we welcome the BBC's apologies and hope that the public corrections can begin to repair some of the appalling damage done and move forward."
A BBC spokeswoman said: "Assignment did not make the allegation that relief aid provided by Band Aid was diverted. However the BBC acknowledges that this impression could have been taken from the programme.
'We also acknowledge that some of our related reporting of the story reinforced this perception.
"The BBC regrets this and accepts we should have been more explicit in making it clear that the allegations did not relate specifically to Band Aid. There will be on air apologies and corrections and we are looking at the lessons that can be learnt."