Mazher Mahmood, the undercover reporter known as the ‘Fake Sheikh’, has been suspended by The Sun newspaper.
The tabloid’s decision comes after Tulisa Contostavlos’ drugs trial collapsed earlier today (21 July).
Judge Alistair McCreath told the jury that the case “cannot go any further” because there were “strong grounds” to believe that Mahmood had “lied” at a pre-trial hearing.
A statement from the newspaper read: “We are very disappointed with this outcome, but do believe the original investigation was conducted within the bounds of the law and the industry's Code. This was demonstrated by the CPS decision to prosecute.
"The Sun, of course, takes the Judge's remarks very seriously. Mr Mahmood has been suspended pending an immediate internal investigation."
The singer had stood accused of boasting that she could “sort out” a large supply of cocaine for an undercover journalist, Mazher ‘Fake Sheikh’ Mahmood.
It was claimed that she’d put him in touch with her rapper friend Mike GLC, who supplied the Class A drug to Mahmood in May 2013.
Mike GLC, real name Michael Coombs, pleaded guilty last week.
Mahmood had posed as a wealthy film producer called Samir Khan when he met the former X Factor judge at a string of luxury hotels and restaurants, jurors at London's Southwark Crown Court heard.
Contostavlos had vehemently denied brokering the deal, which was exposed by the Sun on Sunday newspaper in June 2012.
But today (21 July), Judge McCreath announced that the trial would go no further.
“There are strong grounds for believing Mr Mahmood told me lies,” Judge McCreath told the jury.
He said that a number of things had happened in the case which had thrown up “considerable considerations” and that the trial could not proceed if the prosecution had been “tainted by some serious misconduct”.
The judge said that he had initially refused the defence’s application to throw out the case, but said that matters had changed.
He recounted jury evidence given by the Mahmood, whose evidence is central to the case.
Contostavlos was seen smiling broadly in the dock as the jury was formally discharged, PA reports.
Mahmood could now theoretically face perjury charges.
Michael Coombs’ case was also thrown out.