A Guardian journalist and a Scotland Yard detective will not be prosecuted over leaks relating to the phone-hacking scandal.
There is “insufficient evidence” to bring charges against Amelia Hill, the newspaper's special investigations correspondent, and a 51-year-old detective constable over unauthorised disclosures from Operation Weeting, prosecutor Alison Levitt QC said.
The police officer has been suspended since being arrested at his desk last August by officers from the force's directorate of professional standards.
He was understood to be answering bail this morning. Ms Hill has only been questioned under caution.
All staff on Weeting - the Metropolitan Police's 16-month inquiry into voicemail interceptions by journalists - were required to sign confidentiality agreements before working on the case.
A security review was sparked into how information about the case started appearing in the press over the summer.
Ms Levitt, the principal legal advisor to the Director of Public Prosecutions, said: "All the evidence has now carefully been considered and I have decided that neither the police officer nor the journalist should face a prosecution."
Despite bringing no charges, Ms Levitt has written to the Metropolitan Police and the Independent Police Complaints Commission to recommend disciplinary action against the officer.
"In the circumstances, I have decided that a criminal prosecution is not needed against either Ms Hill or the police officer," she said.
"However, in light of my conclusion that there is sufficient evidence to provide a realistic prospect of convicting the police officer for an offence under the Data Protection Act, I have written to the Metropolitan Police Service and to the IPCC recommending that they consider bringing disciplinary proceedings against him."
She said 10 articles written by Ms Hill in the Guardian "contained confidential information derived from Operation Weeting, including the names of those who had been arrested.
"I am also satisfied that there is sufficient evidence to establish that the police officer disclosed that information to Ms Hill."
But the prosecutor added: "I have concluded that there is insufficient evidence against either suspect to provide a realistic prospect of conviction for the common law offence of misconduct in a public office or conspiracy to commit misconduct in a public office.
"In this case, there is no evidence that the police officer was paid any money for the information he provided.
"Moreover, the information disclosed by the police officer, although confidential, was not highly sensitive. It did not expose anyone to a risk of injury or death. It did not compromise the investigation. And the information in question would probably have made it into the public domain by some other means, albeit at some later stage.
"In those circumstances, I have concluded that there is no realistic prospect of a conviction in the police officer's case because his alleged conduct is not capable of reaching the high threshold necessary to make out the criminal offence of misconduct in public office.
"It follows that there is equally no realistic prospect of a conviction against Ms Hill for aiding and abetting the police officer's conduct."
Guardian editor-in-chief Alan Rusbridger tweeted: "CPS not prosecuting Guardian's Amelia Hill or MPS officer. Sensible decision."
The inquiry into leaks was dubbed Operation Kilo by detectives.
Ms Hill, who has broken a string of exclusives surrounding the investigation, was contacted by police after the detective was arrested.
Ms Levitt said she had considered whether a prosecution is required in the public interest by using the DPP's new interim guidelines for considering criminality in journalism.
"There are finely balanced arguments tending both in favour of and against prosecution," she said.
"Journalists and those who interact with them have no special status under the law and thus the public interest factors have to be considered on a case-by-case basis in the same way as any other.
"However, in cases affecting the media, the DPP's interim guidelines require prosecutors to consider whether the public interest served by the conduct in question outweighs the overall criminality alleged.
"So far as Ms Hill is concerned, the public interest served by her alleged conduct was that she was working with other journalists on a series of articles which, taken together, were capable of disclosing the commission of criminal offences, were intended to hold others to account, including the Metropolitan Police Service and the Crown Prosecution Service, and were capable of raising and contributing to an important matter of public debate, namely the nature and extent of the influence of the media.
"The alleged overall criminality is the breach of the Data Protection Act, but, as already noted, any damage caused by Ms Hill's alleged disclosure was minimal.
"In the circumstances, I have decided that, in her case, the public interest outweighs the overall criminality alleged.
"Different considerations apply to the police officer. As a serving police officer, any claim that there is a public interest in his alleged conduct carries considerably less weight than that of Ms Hill.
"However, there are other important factors tending against prosecution, including as already noted, the fact that no payment was sought or received, and that the disclosure did not compromise the investigation.
"Moreover, disclosing the identity of those who are arrested is not, of itself, a criminal offence.
"It is only unlawful in this case because the disclosure also breached the Data Protection Act."
The extensive Metropolitan Police inquiry into phone hacking and corruption has launched six prosecutions since it began in January last year.
Former News International chief executive Rebekah Brooks will appear in court next month alongside her husband, Charlie Brooks, and four others accused of perverting the course of justice.
Police launched Operation Weeting, the inquiry devoted specifically to phone hacking, after receiving "significant new information" from News International on January 26 last year.
Operation Elveden was launched months later after officers were given documents suggesting News International journalists made illegal payments to police officers.
Officers also launched three related operations: the Sasha inquiry into allegations of perverting the course of justice; Tuleta, the investigation into computer-related offences, as the inquiry escalated; and Kilo.
Metropolitan Police figures showed there were 829 potential victims of phone hacking, of whom 231 were said to be uncontactable.
The scandal has already led to the closure of the News of the World after 168 years, prompted a major public inquiry, and forced the resignation of Met Commissioner Sir Paul Stephenson and his assistant John Yates.
Mr Rusbridger added on Twitter: "CPS seems to have applied its own sensible new guidelines re charging journalists."
Keir Starmer QC said his new rules would help lawyers with the "very difficult decisions" surrounding Scotland Yard's phone-hacking inquiry.
Lawyers must decide if newsgatherers are striking the right balance between public interest and criminality, the guidelines published last month say.
The report urged caution over attempts lawyers might make to force journalists to reveal the identities of confidential sources.
It also tells prosecutors that deciding if journalists should face court is "not an arithmetical exercise".
A statement on the Guardian's website said: "We welcome the Crown Prosecution Service's sensible decision to abandon this worrying attempt to criminalise legitimate contact between journalists and confidential sources.
"Nevertheless, the paper makes no comment on the validity of the Met Police assertion that the officer it identified was Amelia's source in this case."