The Police have dropped legal action which sought to force the Guardian to reveal the confidential sources of its Milly Dowling phone hacking stories which led to public condemnation and the closure of the News of The World when they were published in July.
A police spokesman said: "The Metropolitan Police's Directorate of Professional Standards yesterday consulted the Crown Prosecution Service (CPS) about the alleged leaking of information by a police officer from Operation Weeting.
"The CPS has today asked that more information be provided to its lawyers and for appropriate time to consider the matter".
"In addition the MPS has taken further legal advice this afternoon and as a result has decided not to pursue, at this time, the application for production orders scheduled for hearing on Friday 23 September. We have agreed with the CPS that we will work jointly with them in considering the next steps."
Scotland Yard, who were pursuing the matter under the Official Secrets Act, were widely criticised for being heavy handed with Guardian editor Alan Rusbridger describing it as "vindictive and disproportionate".
The Milly Dowler phone hacking story has so far led to the resignation of high level NI executives including Rebekah Brooks.
Rusbridger welcomed the police’s decision: "It's a huge relief. I think most people were baffled that the act, which is about espionage and spying, should be used on a reporter going about her daily business," he told The Daily Telegraph.
NI is currently negotiating a settlement with Milly Dowler’s family expected to be around the £3m.
