Ali Dizaei was cleared at the Old Bailey in September 2003

The Police Complaints Authority (PCA) had ordered the Metropolitan Police to proceed with action against Superintendent Ali Dizaei.

However, its successor, the Independent Police Complaints Commission (IPPC) ruled on Wednesday such action would not be in the public interest.

Ali Dizaei's trial on dishonesty charges in September 2003 followed claims he was involved in drugs, prostitution and theft.

The IPPC panel said the Metropolitan Police mishandled an attempt to investigate and prosecute the officer "from start to finish".

It found a �4m investigation into Mr Dizaei, codenamed Operation Helios, was "seriously flawed".

But the charges against Mr Dizaei were "capable of proof", the panel added, even though the panel members believed the chances of Mr Dizaei repeating his conduct were low.

'Incompetence and racism'

The long-running Dizaei case had soured relations with black officers, many of whom believed the investigations were racially motivated.

The PCA's decision to force the Met to make Mr Dizaei face a tribunal led to a threat of protest action by the National Black Police Association (NBPA).

On Wednesday news that Supt Dizaei would not face disciplinary action was welcomed by the NBPA's vice-president, Clive Morris.

Mr Morris said: "It is now a matter of public record that the investigation into Supt Dizaei, named operation Helios, was disproportionate, appears to be racially-motivated and a total waste of �7m of taxpayers money.

"It is an example of incompetence and racism."

Before the PCA's intervention in March, Mr Dizaei's acquittal and subsequent settlement with the Metropolitan force appeared to end the long-running saga.

He returned to work last October after a two-year suspension.

In January he was sent on a promotion course designed to reintegrate him into the force.