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Boost for embattled premier Gillard

A scandal that threatened to bring down the Australian government has eased after police announced they would not charge a politician accused of misusing an official credit card to pay prostitutes.

A conviction for theft or fraud against Craig Thomson would have forced him to quit Parliament and cost prime minister Julia Gillard's year-old government its single-seat majority.

With opinion polls showing the government has become deeply unpopular, observers agree that the ruling Labour Party would have little hope of retaining Mr Thomson's seat in an ensuing by-election.

The New South Wales Police Force said in a statement that there was no basis for a criminal investigation.

Mr Thomson released a statement after the decision saying he had "always rejected claims of wrongdoing in these matters".

The allegations, first raised by a Sydney newspaper in 2009, date back to when Mr Thomson was national secretary of the Health Services Union.

He allegedly used his union credit card to pay a Sydney brothel thousands of dollars of union money in two transactions in 2005 and 2007.

Mr Thomson has denied the allegation and claimed that an unnamed man had taken his credit card and forged his signature. Mr Thomson also said that the man had repaid the money.

Mr Thomson sued the newspaper's owner, Fairfax Media Publications, but dropped that court action in May.

Police had never investigated the allegations because the Health Services Union, which is affiliated with Labour, had never made a complaint.

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