Police said the two constables, one who was about to be married, had been deliberately lured into a trap by Dale Cregan, 29, a suspect in another double killing in the city. Cregan handed himself into a local police station after the shooting.
Either Cregan or an associate made the false burglary report to lure the officers to the scene, said Greater Manchester Police Chief Constable Peter Fahy.
"Then he has come out and shot and killed them both," Fahy told reporters, adding Cregan also threw a grenade at them.
"Certainly, it would appear to be that he has deliberately done this in an act of absolutely cold blooded murder. It's almost impossible to fathom such an evil act."
Witnesses reported hearing more than a dozen shots and an explosion. One of the officers died at the scene and the other in hospital, police said.
"PURE EVIL"
Fahy said catching Cregan had been their top priority since the murder of David Short in August and the shooting of Short's son Mark in a pub in May. Police had offered a 50,000 pound reward for information leading to his arrest.
Politicians and chief officers across the country spoke of their horror at the incident.
"What we've seen is just (an) absolutely despicable act of pure evil," Cameron said in a statement.
It is rare for British police officers, especially female constables, to be killed in the line of duty. Unlike the bulk of forces across the world, the overwhelming majority of Britain's 150,000 police officers do not regularly carry firearms, although every force has special armed units and some carry electric Taser stun guns.
The last time more than one police officer was shot dead in the same incident in Britain was in the 1960s.
In 2005, unarmed constable Sharon Beshenivsky was killed and a female colleague wounded when they went to investigate an armed robbery in the northern English city of Bradford.
That led to a heated debate over whether Britain should arm its police, but Fahy, other senior officers and politicians again said they did not want officers to carry firearms.
"We are passionate that the British style of policing is routinely unarmed policing," he said.
"Sadly we know from the experience in America and other countries that having armed officers certainly does not mean sadly that police officers do not end up getting shot dead."
Cameron said more armed units were now available than previously.
"This was supposed to be the response to a domestic burglary and that wouldn't require armed officers," he said.
Paying tribute to the dead officers, Fahy said Karate-loving Hughes had worked for the police for three years and Bone, who had five years service, was preparing for her wedding.
"Her partner only spoke to her this morning about the wedding invites and fellow officers gave her advice about to make them on the computer," he said.
