Mazher Mahmood, the undercover reporter known as the 'Fake Sheikh', was yesterday suspended by The Sun.
The tabloid's decision came after Tulisa Contostavlos' drugs trial collapsed earlier in the day.
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, who turned out to be Mahmood.