The officer misled the senior police investigating the incident about where the incorrect information had come from, the court heard.

Constable Crews, 26, died in September 2010 when, following information from a number of informants, police executed a search warrant in the underground car park of a unit complex in Bankstown.

There was a degree of confusion as the young officer and his colleagues entered the car park, because they had been directed to the wrong garage by Detective Senior Constable Richard McNally, one of those who organised the bust.

As they walked along, drug dealer Philip Nguyen jumped out from behind a car. He was brandishing a silver pistol and fired several shots, catching the officers by surprise.

Constable Crews was hit in the arm by a shot from Nguyen, but was ultimately killed by a stray bullet from a fellow officer during the ensuing exchange of fire.

On Tuesday, Senior Constable McNally told the inquest that after talking to a police informant who lived in the building, he and the search warrant team had walked down into the garage.

Misinterpreting the information from the informant he then pointed the officers in the wrong direction.

"I saw a garage door open, and a car and the light on," Senior Constable McNally told the inquest.

"Since that time, every single night for months ... I've tried to understand how it went the wrong way."

The inquest heard that the following night Senior Constable McNally told investigating police he had simply passed on the directions from the informant and that these had in fact been correct.

On Tuesday he admitted to the Coroner that that was wrong and the directions had in fact come from him.

"The shift the day before I'd started at 8am in the morning," Senior Constable McNally said when asked why he had misled the investigating officers.

"I'd been up all night after the incident, in my mind [at the time of the interview] I was of the belief that we had gone into the right place," he said.

The inquest also heard that Senior Constable McNally had identified the drug bust as a "low risk" operation during the planning phase. This was based, in part, on an informant's comment that Nguyen appeared to be "just a friendly Asian guy".

He said he had significantly changed the way he planned drug searches after Constable Crews' death and that, had these measures been in place at the time, the officer's death might have been avoided.

These changes included more extensive intelligence gathering prior to an operation and requiring all officers directly involved to wear body armour.

The inquest continues.