King scored after 22 minutes, only for it to be chalked off following a lengthy VAR review for a foul by Rodrigo Muniz in the build-up.
Muniz was deemed to have fouled Chelsea defender Trevoh Chalobah when he trod on his foot as he turned near the halfway line.
The panel, which reviews the big refereeing decisions in the Premier League each week, agreed that VAR Michael Salisbury was wrong to intervene and referee Rob Jones was wrong to subsequently disallow the goal.
The panel wrote: “The panel unanimously supported the original on-field call to allow play to continue and award the goal.”
It also said Wolves should have been awarded a penalty for Iliman Ndiaye’s foul on Hugo Bueno in the 3-2 loss to Everton.
Three of the five members of the panel said VAR Craig Pawson’s decision not to intervene was a mistake.
“The contact made is careless and the panel felt a penalty should have been awarded and that VAR should have intervened on the basis it was a clear and obvious error in not penalising the foul,” the panel wrote.
Wolves are without a point at the bottom of the table.
Chelsea beat Fulham 2-0 thanks to Joao Pedro’s header and Enzo Fernandez’s penalty, both of which came after King’s goal was ruled out.
Fulham are without a win after three league games, and manager Marco Silva said after the game: “How you disallow a goal like that is unbelievable.
“VAR is not here to re-referee the game.”
Salisbury was stood down as VAR for Liverpool’s win over Arsenal the following day.
