BBC Political correspondent John Pienaar: It will be a relief to Mr Mandelson that it hasn't gone all the way

The Britannia had been investigating whether the former trade secretary broke any rules when he filled in his mortgage application.

Mr Mandelson, who resigned from the government over the affair, took a £150,000 mortgage from the building society after receiving a loan of £373,000 from the former Paymaster General, Geoffrey Robinson.

The building society announced on Friday it would not take the issue any further and the matter will not be referred to the police.

Mr Mandelson said, in a statement, he was "delighted" he had been given a "clean bill of health" by the building society.

The former Cabinet minister said the "intense speculation" in the media that he had broken building society rules had contributed to the pressure on him to resign.

He added: "It is behind me now and I just want to get on with rebuilding my life and career."

The inquiry was prompted by concerns that Mr Mandelson may have misled the society when applying for the £150,000 mortgage on his home in Notting Hill, London, by failing to disclose details of the loan from Mr Robinson.

In a statement, the society's chief executive John Heaps described how Mr Mandelson applied for a mortgage with Britannia in October 1996.

He added: "Mr Mandelson has written to the society clarifying his present personal financial position.

"We responded as we would in any case where a member brought new information to our attention, reviewing the mortgage arrangement in accordance with our normal procedures, and there have been no special courtesies extended to Mr Mandelson.

"Having completed this review, I am satisfied that the information given to us at the time of the mortgage application was accurate."

The statement concluded: "Having regard to all the circumstances, I have therefore decided not to pursue the matter further with Mr Mandelson."

Earlier, a spokesman for Mr Mandelson denied the former minister had been interviewed by Britannia investigators over his application for a £150,000 mortgage.

Mr Mandelson borrowed £373,000 to buy his London home

But he confirmed Mr Mandelson had been in correspondence with the society after conceding he might not have revealed details of the secret loan.

The low-interest loan from Mr Robinson to his friend and colleague was revealed before Christmas. Both Mr Mandelson and Mr Robinson resigned within hours of each other on 23 December.

The affair claimed a third scalp earlier this week with the decision by Chancellor Gordon Brown's press secretary Charlie Whelan to resign. Although many believed he had behind the revelations about the secret loan, he strongly denied any leaking the story.

Mr Mandelson's resignation left questions about the building society loan unanswered, which still remain unclear.

The former minister would have been required to give Britannia details of all loan agreements when he applied for the mortgage.