Israeli Prime Minister Ariel Sharon will not face charges over his role in an alleged bribery scandal, Attorney General Menachem Mazuz has announced.
Mazuz denied showing leniency towards the premier
Officials had been probing claims that Mr Sharon illegally received large sums from a property developer, but Mr Mazuz said there was insufficient evidence.
He reportedly telephoned the prime minister before the announcement, and Mr Sharon thanked him.
The long-running allegations stemmed from the so-called Greek Island affair.
An investigation was launched after Chief Prosecutor Edna Arbel recommended charges at the end of March.
"My decision on this case was not based on leniency toward the prime minister - the evidence was weak and did not add up to a solid case," Mr Mazuz said on live TV.
Justice Minister Tommy Lapid welcomed the ruling and called on Israel's opposition Labour Party to join Mr Sharon's embattled coalition.
"I think it now the time for the Labour Party to join the government," he was quoted as saying in Haaretz newspaper.
The attorney general said that a "scrupulous point-by-point examination of the case" had failed to find "the slightest case of corruption... in the Greek Island affair".
He said that Mr Sharon would face no charges and that he had closed the dossier on the affair, which dates back to the late 1990s.
PRIME MINISTERIAL SCANDALS
Yitzhak Rabin: Resigned in 1977 because his wife infringed foreign currency regulations by holding a US bank account
Benjamin Netanyahu: Lost 1999 election while facing allegations of keeping gifts that should have gone to the state and misusing state funds - charges eventually dropped
Ehud Barak: Was questioned over fund-raising irregularities in 1999 election campaign - denied wrongdoing, saying he had no role in fund-raising
The BBC's Matthew Price reports from Jerusalem that the ruling is good news for Mr Sharon after weeks of mounting political difficulties, largely over his plans to withdraw from the Gaza Strip.
This month alone he has sacked two ministers who would not support him, lost his parliamentary majority and seen his ruling party begin to fracture.
With these allegations now removed, our correspondent says, the prime minister can concentrate on trying to find new partners to help bolster his ruling coalition.
The attorney general also said that no charges would be pressed against the prime minister's son, Gilad Sharon.
"There is no evidentiary basis to suspect that Gilad was involved in fictitious business dealings," he said.
Gilad Sharon was said to have accepted hundreds of thousands of dollars from Israeli businessman David Appel, who wanted to develop a Greek island into a tourist resort.
The project was never completed but Mr Sharon, who was foreign minister at the time, was suspected of having used his position to try to win the Greek government's approval for the plan.
Sharon's hold on power has been in question
Israeli political commentators had said the prime minister would have little choice but to step down were he charged over the scandal.
Mr Appel has already been indicted in the investigation, but commentators say the charges are likely to be dropped.
Leftist opposition politicians have vowed to challenge the decision before Israel's High Court and Mr Sharon could also face indictment in another corruption investigation in which he has denied breaking any laws.