The ICO investigated after it was discovered that Google had collected data including emails, complete URLs and passwords from UK citizens as part of its Street View mapping exercise.
Although the Metropolitan Police is not pursuing an investigation, the Information Commissioner has said it is his view that "the collection of this information was not fair or lawful".
The ICO has rejected calls for a monetary penalty but will audit Google UK's internal policies for privacy and security awareness within nine months after giving it the chance to update its practices.
It has also required Google to delete the data in question as soon as it is legally cleared to do so, and instructed it to sign an undertaking in which the company commits to take action to ensure that breaches of this kind cannot happen again.
Peter Fleischer, Google's global privacy counsel, said: "We are profoundly sorry for mistakenly collecting payload data in the UK from unencrypted wireless networks.
"Since we announced our mistake in May we have cooperated closely with the ICO and worked to improve our internal controls. As we have said before, we did not want this data, have never used any of it in our products or services, and have sought to delete it as quickly as possible.
"We are in the process of confirming that there are no outstanding legal obligations upon us to retain the data, and will then ensure that it is quickly and safely deleted.
Separately in the US, Google has reached a legal settlement with users of Google Buzz, the social media service launched within Gmail in February this year.
They were suing the company because of concerns about their privacy. Buzz was launched with default settings that made public all users' Gmail contacts, which .
Google emailed a statement to all of its American users yesterday, explaining the outcome of the settlement. It said: "The settlement acknowledges that we quickly changed the service to address users' concerns.
"In addition, Google has committed $8.5 million to an independent fund, most of which will support organizations promoting privacy education and policy on the web.
"We will also do more to educate people about privacy controls specific to Buzz. The more people know about privacy online, the better their online experience will be."
Google added: "Just to be clear, this is not a settlement in which people who use Gmail can file to receive compensation."
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