The 53-year-old policeman, who lied about witnessing the row in Downing Street in September 2012 that ultimately led to the resignation of the then Chief Whip Andrew Mitchell, will be sentenced next month, pending psychiatric reports.
Mr Mitchell last night declared "justice has been done" but made clear many more questions remained unanswered.
A swift return to government for the Conservative MP for Sutton Coldfield in the Midlands is unlikely, according to one senior Whitehall source close to the Prime Minister, who made clear there were several outstanding legal issues to be sorted out first.
These include libel actions and several police misconduct hearings.
Sir Bernard Hogan-Howe, the Metropolitan Police Commissioner, acknowledged the actions of Wallis had fallen "way below the standards expected" of his officers and that they had undermined public trust.
He apologised to Mr Mitchell and made clear he wanted to do so in person.
Senior Conservative backbencher Sir Richard Ottaway, a London MP, said it was a "very black day for the Met" and suggested Sir Bernard's job could now be on the line.
Labour's Keith Vaz, who chairs the Commons Home Affairs Committee, noted the guilty plea appeared to be "a complete vindication" of Mr Mitchell.
Mr Cameron said: "It is completely unacceptable for a serving police officer to falsify an account of any incident.
"Andrew Mitchell has consistently denied the version of events presented in the email and I welcome the fact that the officer concerned has now pleaded guilty."
Wallis, from west London, was charged after sending an email to his local MP John Randall, the Tory Deputy Chief Whip, wrongly claiming he had seen what had happened as Mr Mitchell left Downing Street on September 19, 2012.
The then chief whip became involved in a heated confrontation with another police officer, Toby Rowland, after he was refused permission to cycle through the main gate.
Mr Mitchell later admitted swearing but denied PC Rowland's claim he had used the word "pleb".
A month after the incident, political and media pressure led to the Tory MP's resignation from the Cabinet.
Responding to the guilty plea, Mr Mitchell said: "It is very sad and worrying for all of us that a serving police officer should have behaved in this way.
"There remain many questions unanswered; in particular why PC Wallis wrote this email and who else was involved in this process.
"I am looking forward to seeing justice done in the up to 10 other related disciplinary cases involving police officers so that I can focus all my energy on delivering for my constituents and help David Cameron win a Conservative majority at the 2015 election," he added.
Wallis, wearing a black suit and tie, stood in the dock and spoke only to confirm his name and that he understood the charge before entering his guilty plea.
The court heard Wallis, of the Metropolitan Police diplomatic protection group, admitted the offence in police interview and had offered to resign.
Mr Justice Sweeney adjourned sentencing to February 6 pending pre-sentence psychiatric reports.
He released Wallis on unconditional bail but warned him that "all sentencing options remain open to the court".