The Guardian has been forced to clarify a story about the May 2010 Gaza flotilla, which tried to breach the Israeli blockade, suggesting that anti-Israel activists on board had been unarmed.

The story, published in May, reported on the Israeli government offering £4 million in compensation to the families of Turkish activists killed on the Mavi Marmara ship, which led the flotilla.

It claimed that Israeli naval commandos who had boarded the ship had “used lethal force against the unarmed passengers to end their resistance”.

A reader reported the newspaper to the Press Complaints Commission, which ruled that the Guardian had breached clause one of the commission’s code on accuracy.

In its decision, the PCC said the article had been “inaccurate and misleading” in claiming the Mavi Marmara passengers were “unarmed”.

The commission acknowledged that the UN’s Palmer Report into the flotilla had found that the Israeli soldiers had been attacked with slingshots and chains.

The PCC adjudication added: “In this instance, the commission considered that referring to the Mavi Marmara passengers as being ‘unarmed’, without mention of the weaponry which was acknowledged to have been used by the passengers, may have resulted in readers being significantly misled.”

A clarification added to the online version of the story on the Guardian website said the “reference in this article to passengers being ‘unarmed’ is used in conventional contrast to the IDF soldiers being armed with guns”, and made clear that the Palmer Report had found that the passengers were carrying “metal bars, chains, slingshots and staves”.

The New York-based CiF Watch, which monitors Guardian coverage of Israel, assisted the reader in complaining to the PCC and said it was “pleased” with the adjudication.

A CiF Watch spokesman said: “It is important that the Guardian should be reminded that while it may believe that it is free to act with impunity when it comes to its coverage of Israel, it will still be held to basic standards of honesty and accuracy in its discharge of its journalistic duties.”

A Guardian spokesperson said: “The word ‘unarmed’ in our article was used in contrast to the ‘armed commandos’, which we genuinely intended and believed readers would understand as a reference to firearms.

“It was not to ignore the information contained in the Palmer Report. However, after further consideration we accepted the possible ambiguity in the term, which is why we proposed a footnote of clarification.

“The footnote was added promptly after the PCC agreed with us that it was an appropriate way to resolve the matter.”