Labour peer Baroness Uddin will not face prosecution following a Scotland Yard investigation into her claims for parliamentary allowances.
The decision came after specialist legal experts spent weeks examining a Metropolitan Police file of evidence against her.
The peer faced allegations that she claimed tens of thousands of pounds in allowances for a flat she rarely used.
But Director of Public Prosecutions Keir Starmer said there was a "very real difficulty" in interpreting the definition of "only or main" residence for peers.
Lady Uddin said that she was relieved her ordeal had finally ended, saying: "I only wish now to say thank you to everyone who supported me through a very difficult time."
She could still be disciplined by the Lords authorities if they find she breached guidelines for allowances.
An inquiry opened in July was put on hold pending the police investigation, but could now be referred to a committee that examines Lords' interests.
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