Labour has announced it will pursue "urgent" disciplinary action over alleged irregularities in the contest to select a candidate in Falkirk, after police said there were "insufficient grounds" for a criminal investigation.
Meanwhile, the Information Commissioner's Office (ICO) confirmed it was conducting an investigation into claims that data protection rules may have been broken in the Scottish constituency.
Labour handed over documents to police earlier this month amid allegations that Unite - the party's biggest trade union backer - sought to swing the contest in favour of its preferred candidate by cramming the constituency with more than 100 new members, some of them without their knowledge.
Unite said it had broken neither the law nor Labour Party rules and welcomed the police announcement as "an overdue application of common sense". The union called on Labour to lift the suspensions of would-be candidate Karie Murphy and Falkirk's constituency chairman Stephen Deans.
The pair were suspended and the Falkirk constituency party was put into "special measures" after an internal report - which has not yet been published - found cause for concern over the process of selecting a candidate for the 2015 general election.
A vacancy was created when MP Eric Joyce left the party after being involved in a Westminster bar brawl. The party's actions sparked a bitter dispute with Unite, whose leader Len McCluskey has dismissed the allegations as "nonsense". Meanwhile, election co-ordinator Tom Watson - who has close links with Unite - stepped down from the shadow cabinet.
A police spokeswoman said that "following a comprehensive review of all material submitted, Police Scotland has concluded there are insufficient grounds to support a criminal investigation at this time", adding: "However, should further information come to light, this will be looked into."
A Unite spokesman said: "Unite welcomes the police decision not to investigate the Falkirk selection, which appears to be based on an overdue application of common sense to the situation.
"Unite reaffirms what it has always said - the union broke neither Labour Party rules nor the law in Falkirk. Those in the media who have smeared the union without evidence or justification should now hang their heads in shame. We would hope that Labour will now lift the suspensions of Stevie Deans and Karie Murphy, agree to an independent investigation into what happened in Falkirk, and restore full rights to the constituency party as soon as possible."
A Labour Party spokesman said: "As a result of the police decision, we will now pursue disciplinary action as a matter of urgency. The internal Labour inquiry found there was enough evidence to concern us about membership recruitment in Falkirk. We will act on this swiftly and thoroughly, as we have done throughout this matter."