Mr Khadka, 20, had been due to go to the High Court in London tomorrow after winning a judicial review of the decision by Michael Howard, the former home secretary, to deport him.
He was never granted a residence permit after arriving in Britain five years ago and being adopted by businessman Richard Morley, whose home, Clearwell Castle in the Forest of Dean, Mr Khadka is now due to inherit.
In a statement issued last night, Mr Straw said he had decided to accept the strong recommendation of the Immigration Appeal Tribunal, the most senior body dealing with immigration appeals, that Mr Khadka should not be deported. He had decided to accept the tribunal's conclusion that "there is not the slightest danger that Mr Khadka would ever become a burden on public funds" and that "any public interest there may be in immigration control in general is outweighed in this case by the circumstances relevant to it".
The statement said Mr Khadka was "a young man of promise and it would be regrettable if that promise were to be fundamentally affected".
Mr Morley adopted the orphan after striking a pact with his father, who had saved the Englishman's life during a trekking expedition in Nepal. He said last night: "It has been six years of worry and strain trying to win the right for our son to remain with us. We are overjoyed that the new Government stood firm on human rights and has given all those who seek compassion a fresh hope in the future."
Ian BurrellReuse content