The payment was made despite two chief police officers being aware of 76 warnings over Simeon Taylor's conduct in the build up to the trial.
The details are revealed in a damning 587-page report compiled by the police watchdog published yesterday after nearly three years.
The Independent Police Complaints Commission said former senior Staffordshire officers had failed in their 'professional, ethical and moral obligation' over the case.
But it found no corruption or cover-up.
Today a whistleblower said it demonstrated there was an 'at all costs' culture to secure convictions over the 2002 gangland execution-style killing.
The report, known as Operation Kalmia, said former Staffordshire Assistant Chief Constables Adrian Lee and Suzette Davenport did not take any action despite Taylor breaching terms of his protected witness status, including trashing a safe house, committing a crime, and associating with drug dealers.
The report states: "A Memorandum of Understanding (MoU) was agreed between Staffordshire Police and the protected witness.
"This was a code of conduct the witness agreed to comply with, however the investigation found that the witness breached the MOU at least 76 times and was given three written warnings by Staffordshire Police.
"The investigator found that ACC Lee had lead responsibility for ensuring the protected witness complied with the MOU for six months however he did not manage significant breaches of the MOU appropriately intrusively.
"ACC Lee did not document why he believed the witness should remain under protection despite breaching the MOU."
On Davenport, it said: "The investigator found that she failed to intrusively manage further significant breaches of the MOU, including arrest for drugs offences.
"She also allowed the protected witness to be paid inappropriate expenses and to obtain cash as a result of booking out of a hotel which was a criminal act for which no action was taken."
Mr Lee later became Northamptonshire Chief Constable and Ms Davenport Chief Constable of Gloucestershire. Both deny wrongdoing and responsibility.
The IPCC report revealed Taylor, who claimed he witnessed the murder and drove some of the killers to the scene, had agreed a £23,000 reward for giving evidence with the police.
But he later received £15,000 because police deducted £8,000 for damage caused to a safe house in Cardiff.
Former Detective Inspector Joe Anderson, who blew the whistle on the case, said: "There were repeated warnings that Taylor was not a reliable witness and that he was a risk to himself, others, and would damage the integrity of the force. He should have been dropped but they ignored this and ended up handing him thousands of pounds of taxpayers' money. The public will find it shocking."
The report, led by then-Derbyshire Chief Constable Mick Creedon, investigated 14 people who had been Staffordshire officers at the time of the Nunes case, including recently retired Chief Constable Jane Sawyers and West Midlands Assistant Chief Constable Marcus Beale. He said the senior officers and some junior officers should face disciplinary hearings but he was later overruled.
The inquiry centred on the failure to disclose a damning internal dossier, which documented failings in the unit handling the case and concerns over the witness and his handlers, to the original trial.
Nunes, 20, a Stafford Rangers footballer from Whitmore Reans, was killed in a country lane in Pattingham.
Adam Joof of Willenhall, Levi Walker of Birmingham, Antonio Christie of Great Bridge, and Owen Crooks and Michael Osbourne both of Wolverhampton were given life sentences for the killing in 2008 but were then cleared in 2012 when the police failings came to light.