The Unite union has said its favoured candidate should be allowed back into Labour's Falkirk selection race after police announced they would not investigate allegations of vote rigging.
Police Scotland said there was "insufficient" evidence to launch a criminal investigation.
But an inquiry by the Information Commissioner's Office, into claims that data protection laws may have been broken, is ongoing.
Unite welcomed the police decision and reiterated its call for an independent investigation into Labour's handling of the case. The union also demanded that Karie Murphy's suspension from the party be lifted and said that she should be allowed to run to be Labour's candidate for Falkirk the 2015 general election.
But Labour insisted an internal inquiry had shown evidence for concern and said that it would pursue "urgent" disciplinary action over the alleged irregularities.
Earlier this month, Ed Miliband said the inquiry had shown that "people were being signed up as members of the Labour Party without their knowledge."
This week Unite boss Len McCluskey said the union has played by Labour party rules and has done nothing wrong. He has dismissed the party's internal report into the row as a "shoddy farce".He also tried to derail Mr Miliband's attempts to loosen the party's links with the unions by demanding a greater say over Labour's future direction.
A police spokeswoman said: "Following a comprehensive review of all material, Police Scotland has concluded there are insufficient grounds to support a criminal investigation at this time."
A Unite spokesman 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."
A Labour Party spokesman said: "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."
The Tories last night called on Mr Miliband to publish the Falkirk report and to re-run selection contests in 40 other constituencies where Unite activists have been supporting candidates.
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