Watkins was jailed for 29 years in December 2013 with a further six years on licence, after admitting a string of sex offences, including the attempted rape of a fan's baby.
The disgraced singer was arrested following the execution of a drugs warrant at his Pontypridd home on September 21 2012 when a large number of computers, mobile phones and storage devices were seized.
Analysis of the equipment uncovered Watkins depraved behaviour.
Ms Mjadzelics first reported Watkins to the authorities in December 2008 and was video interviewed in March 2009 when she told officers she had a message on her mobile phone from Watkins about his desire to sexually abuse children.
The report says the phone was not examined 'on the basis that her report was malicious'.
It goes on: "It would have been found to hold a message Ian Watkins sent to Ms Mjadzelics on August 12 2007, which read: 'WISHLIST RAPE A 12 YR OLD F*** TWO UNDERAGE TWINS'.
"The message corroborated Ms Mjadzelics's allegations that Watkins had expressed 'desires to abuse children'."
Ms Mjadzelics was cleared of possessing indecent images of children in January 2015, having told Cardiff Crown Court she was trying to entrap the depraved singer.
An NSPCC Cymru Wales spokesman said the report's damning conclusions should be a "wake-up call" for all those involved.
"That a simple unchecked mobile phone could have helped to prevent further abuse by Watkins is unthinkable, and is just one cause for significant concern among this catalogue of basic failures," he said.
"While Watkins is now thankfully behind bars where he belongs, and improvements have already been made by South Wales Police, it's clear that very serious mistakes were made in handling multiple early allegations and this report's recommendations must be adopted swiftly."
In total the IPCC investigation found South Wales Police did not adequately action eight reports and three intelligence logs from six individuals concerning the activities of Watkins between 2008 and 2012.
Mr Williams said: "Some were conflated with reports made by Ms Mjadzelics and were thus dismissed as lacking credibility.
"All those involved in responding accepted the initial sceptical view of Ms Mjadzelics's reports, demonstrating a lack of open-mindedness and professional curiosity. This continued until 'the right type of complainant came along'.
"Police officers will rarely encounter a perfect witness; it is vital that officers ensure they remain open-minded and pursue all appropriate lines of enquiry to establish whether there is any independent corroboration for the allegations being made."
Other missed opportunities detailed in the report include:
- The IPCC found an alleged victim and her parents were not visited by officers following Ms Mjadzelics's complaint in 2008
- Crimestoppers reports from 2010, and reports from two witnesses in that year and in 2012 "do not appear to have been progressed", despite corroborating Ms Mjadzelics's account
- No actions was taken on Ms Mjadzelics's email complaint to the ACPO inbox in 2011 that her reports had not been properly investigated
She added the investigation found no evidence to show that police inaction was a result of Watkins's celebrity, rather the assessment of Ms Mjadzelics as lacking credibility.
Ms Williams said that the decision-making on the reports involved a small number of officers but the investigation found "weaknesses" in South Wales Police procedures relating to allegations of child abuse including: poor record keeping and retention; poor management of intelligence; safeguarding; supervision; a lack of rigour in progressing investigations; the handling of third party reports as opposed to those from victims; and an inadequate approach to cross border investigations.
South Wales Police accepted the findings of the IPCC report, which Ms Williams said "does provide assurance to the public that if they come forward with credible concerns, they will be taken seriously and investigated thoroughly".
Following the investigation it was decided one officer had a case to answer for gross misconduct, and two officers had a case to answer for misconduct.
At a hearing in May, Detective Sergeant Andrew Whelan was cleared of wrongdoing and a decision has been made not to take any further action concerning two detective constables.
In a report issued last Friday, the IPCC found that three officers from South Yorkshire Police would have a case to answer for gross misconduct, but as each has retired following 30 years' service, no further action can be taken.
Commenting on the report Assistant Chief Constable Jeremy Vaughan said it highlighted a number of failings "which the force entirely accepts and regrets".
"South Wales Police failed to listen and properly investigate information about Watkins' offending behaviour, for this we are truly sorry," he said.
"The review instigated as a result of Watkins' arrest led to significant changes being made to the way we investigate crimes of this nature."
Mr Vaughan said the force had invested in establishing teams of dedicated and specially trained staff who deal with child protection issues.
"I am confident that police officers and staff who work in this very challenging area care deeply about the service they provide to victims," he added.
"The work of the investigation team who brought Watkins to justice resulted in him receiving a 29-year prison sentence for his appalling crimes against children.
"I know it is difficult taking that first step in reporting child abuse and that people coming forward need support but we urge anyone with concerns about a child or young person to get in touch with us immediately."
