The family of James Ashley today vowed to sue Sussex Police over his killing.
They said their faith in justice had been "cruelly dashed".
The solicitor acting for Mr Ashley's two children said a civil action alleging negligence against Sussex Police would be launched.
Brian Jackson said the children, who cannot be identified for legal reasons, would seek compensation for the loss of their father.
The Liverpool-based lawyer said: "The family of James Ashley hoped those responsible for his death would be successfully prosecuted.
"Their hopes, and faith in justice, have been cruelly dashed. People will be left bewildered by this, as are the children of the deceased.
"Mr Ashley's children are now pursuing a negligence case against Sussex Police to obtain compensation for the tragic loss of their father."
Mrs Justice Rafferty said today that Sussex Police bore a "heavy burden" over the fatal shooting.
Tony Ashley, 32, said his brother was naked and unarmed when police burst into his bedroom and shot him.
Earlier this month he bitterly criticised the trial judge when she effectively cleared the officer who pulled the trigger.
Speaking outside the Old Bailey in London, he said: "Mrs Justice Rafferty has been judge and jury. This is another nail in the coffin of so-called British justice."
Mr Ashley, a Customs and Excise worker from Dingle, Liverpool, added: "We will carry on the fight for justice with dignity."
And three weeks ago, marksman PC Christopher Sherwood, 34, was cleared of murder and manslaughter on the same judge's direction at the Old Bailey.
But the case could not be reported fully until now because of legal restrictions.
Mr Ashley was shot in the middle of the night in front of his 19-year-old girlfriend Caroline Courtland-Smith.
PC Sherwood later told other officers Mr Ashley was moving towards him and he thought his life was in danger.
Near the end of the prosecution case, Mrs Justice Rafferty ruled that the prosecution had not been able to disprove Sherwood's claim that he had acted in self-defence.
She directed the jury to return not guilty verdicts after listening to legal arguments from defence barrister Nicholas Purnell, QC, who said the officer had been "badly served" by those who had organised the raid.
The judge said a police training expert, Superintendent Alan Bailey, had told the court that Sherwood had no choice as a serving police officer. He should not have been put in a position of "unacceptable danger".
The judge said that Sherwood had to judge the level of threat he thought he faced in "a second or seconds" in a confined space and in darkness, except for torchlight.
Mr Purnell argued that Sherwood and other firearms officers had been briefed that they were dealing with dangerous men who might be armed.
Nigel Sweeney, QC, prosecuting, said: "The true picture did not justify the authority. Indeed, if the deputy chief constable had done his job properly, he would have discovered the frailty of the picture that he was given."
He said it was "common ground between the prosecution and defence" in the case that the armed entry "should never have taken place".
He said Sherwood and other officers had been given a "defective" briefing hours before the raid in which Mr Ashley was depicted as a dangerous suspect.
They had been told wrongly that Mr Ashley had a conviction for murder and that he had shot someone with a shotgun.
Sherwood was taking part in his first armed raid and was later found to have a degree of "tunnel vision".
He and other officers were instructed to search the flat using the "high risk" Bermuda method favoured for dealing with terrorism.
But the lack of plans meant officers had bumped into an ironing board and had been delayed as they had to force an unexpected communal door.
Mr Sweeney said: "Taking part in a police operation is not a licence to shoot. It is not an immunity from prosecution."
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