A former deputy editor of the News of the World suffered "a terrible ordeal" while he was left on police bail for nearly two years, his solicitor has said.
Neil Wallis has been told that prosecutors will take no action over an alleged phone hacking conspiracy due to lack of evidence.
His solicitor Phil Smith said: "Since he was arrested at dawn in July 2011, Mr Wallis has been subjected to a terrible ordeal. Whilst he is relieved that this is at an end he would now like the opportunity to reconstruct his career and his and his family's personal lives.
"His trauma cannot be overstated but at the end of this affair Mr Wallis' integrity is not only intact but his reputation has been significantly enhanced by his vindication. As Lord Leveson concluded, after hearing evidence from Mr Wallis on three occasions, he is a thoroughly professional and conscientious journalist."
Prosecutors announced that there was insufficient evidence to bring charges against a journalist arrested under Operation Weeting, Scotland Yard's investigation into phone hacking.
The former tabloid editor said on Twitter: "After 21 months of hell for my family, CPS have just told my solicitors that there will be no prosecution of me re my phone-hacking arrest." He was held in July 2011 on suspicion of conspiracy to intercept communications.
At the height of the phone hacking scandal, Mr Wallis became embroiled in the controversy which led to the resignation of then Metropolitan Police Commissioner Sir Paul Stephenson. The country's most senior officer quit in July 2011 after he came under fire for hiring Mr Wallis as a PR consultant before his arrest.
The journalist also had close contact with Assistant Commissioner John Yates, who also resigned after criticism of his links to the NotW and the decision not to reopen the inquiry into phone hacking.
In a statement, Alison Levitt QC, principal legal adviser to the Director of Public Prosecutions, said prosecutors had been considering whether to bring charges against two journalists over alleged phone hacking.
She said: "The file in relation to one of those two journalists was resubmitted on January 11 2013. Having carefully considered the matter, the Crown Prosecution Service has concluded that there is insufficient evidence for a realistic prospect of conviction in relation to that journalist. The other journalist remains under investigation."