Mr Draper, a former aide to Trade and Industry Secretary Peter Mandelson, was referred to the party's National Executive Committee by two backbench MPs.

He had boasted to undercover newspaper reporters of his access to the government.

'An idiot'

Alice Mahon, MP for Halifax, and Gordon Prentice, who represents Pendle, wanted him dealt with for conduct "grossly detrimental to the interests of the Labour party".

Draper: No grounds to proceed against him

The NEC had decided there are no grounds for proceeding against him, said a Labour Party spokesman.

He said: "Nobody is trying to excuse anything that Derek Draper has done.

"Obviously Derek Draper is an idiot who has done himself a lot of damage.

"But just because someone who is a member of the Labour Party does something idiotic, that is not grounds for discipline."

After the allegations surfaced last month Mr Draper left his job with GPC Market Access and was sacked from his column on the Daily Express.