Cold case homicide officer Detective Sergeant Virginia Gray was tasked with investigating the 1973 attack, that killed 15 people, for the coroner before the inquest being held in Brisbane.
During a sitting held last year Det Sgt Gray - an officer with 27 years of policing experience - said she was told to remove everything from the fourth paragraph to about page 27 after meeting her superiors in September 2020.
A redacted version of the section of the report was released to the media when a second sitting of the inquest began on Monday.
Two men - John Andrew Stuart and James Richard Finch - were convicted in 1973 of murder over the attack in 1973 and sentenced to life in prison.
Both men have since died.
Det Sgt Gray's report states a review of the 1973 investigative file confirms "there was information available to investigators at the time ... implicating others as suspects in the Whiskey Au Go Go (WAGG) arson murders, as well as significant evidence supporting a noteworthy Sydney criminal presence in Brisbane at that time".
"However there is little or no reference to the investigation addressing these lines of inquiry other than to obtain statements from these parties who claim no interest in Brisbane clubs or knowledge of or involvement in Stuart's extortion claims," it states.
"With the benefit of hindsight, the manner in which the early investigation evolved, meant that three days after the fire, the door effectively closed on the possibility that other parties would be identified and prosecuted for this offence."
Det Sgt Gray said further evidence supported the theory others were involved in planning and executing the attack and the 1974 murders of Barbara McCulkin and her two daughters.
It has been alleged that these parties were protected from prosecution for their role in the club attack and the McCulkin murders.
"This protection being in the form of either deliberate decisions to protect these other offenders or as an unintentional result of the investigative approach used to ensure the timely arrest and conviction of Finch and Stuart," she added.
"While acknowledging the original investigators were under immense pressure to get a result, questions around the effectiveness and credibility of the original investigation remain."
Two drums of fuel were thrown into the downstairs foyer of the bustling nightclub in Brisbane's Fortitude Valley and set alight about 2am on March 8.
More than 60 patrons and staff tried frantically to escape as air conditioning vents acted as chimneys, pouring black smoke into the club.
Survivors smashed windows to scramble to neighbouring roofs, but 15 people succumbed to deadly smoke, with autopsies confirming their death from carbon monoxide poisoning.
Det Sgt Gray said the events arose out of violence and disputes between and in and around Brisbane nightclubs.
Police had also been aware the Whiskey and other licenced premises in Brisbane were the subject of an apparent "protection racket" approach.
The new inquest before coroner Terry Ryan was ordered after the firebombing was mentioned in a trial in which Vincent O'Dempsey and Garry Dubois were convicted over the deaths of the McCulkin's.
That trial was told the killings may have been motivated over fears Ms McCulkin would try to implicate O'Dempsey in the firebombing.
O'Dempsey - who sat in the court during some testimony - is expected to testify during the last week of the sitting.
Dubois was scheduled to give evidence, but was found dead in his cell at Maryborough Correctional Centre last year.
Det Sgt Gray said earlier that Detective Inspector Damien Hansen told her "they didn't need references to the early investigation" and he was unhappy with references relating to an interview on March 11, 1973 with Finch.
She sent the amended report as instructed, but later resubmitted the full report believing the information was relevant. Both versions were provided to the coroner's office.
The inquest continues.
