The Government is to review the Official Secrets Act after the withdrawal of the case against Katharine Gun, the GCHQ whistleblower, Downing Street announced today.

The Prime Minister's official spokesman said that the Government had been disappointed by the decision to offer no evidence against Ms Gun, who admitted leaking details of US requests to help eavesdrop on United Nations Security Council delegates in the build-up to the Iraq war.

The spokesman said: "It's a matter of common sense, when we have the outcome of a specific case yesterday which we did not want as a Government, which we were disappointed with as a Government, that you have a review of the working of the Official Secrets Act.

"You see whether, and I stress whether, there are changes that need to be made."

The spokesman would not say who would conduct the review.

Ms Gun, 29, a GCHQ translator, was charged under the Official Secrets Act with disclosing security and intelligence information. She pleaded not guilty saying that going public was in the public interest.

The Attorney General said earlier today that the decision to drop the case against her was made solely on legal grounds.

Lord Goldsmith told the House of Lords that the decision to offer no further evidence was made by the Crown Prosecution Service and was "free from any political interference". He added in a statement that all decisions on whether to proceed with prosecutions were taken in the public interest and not in the interests of the Government.

The Attorney General also told his fellow peers that the decision to drop the case against Ms Gun was not related to the legal advice he had given to the Government regarding the legality of the Iraq war.

The case against Ms Gun, which had taken 11 months to reach the Old Bailey, was dramatically dismissed yesterday when the CPS declined to offer any evidence against her.

Lord Goldsmith said that he was responsible for originally giving the go-ahead for the prosecution. The independent prosecutor had told him that there was enough evidence for the prosecution to go ahead so he gave the Crown Prosecution Service his consent, he said.

After keeping the evidence under review however, the CPS later decided that there was not enough evidence for a realistic prospect of a conviction, Lord Goldsmith added.

For the Tories, Lord Howell of Guildford said that there were "some very puzzling and curious aspects" of the case such as why the decision to drop it was taken "so late in the day".

Lord Howell asked why the evidential basis for carrying forward the case had changed as it "leaves a mystery hanging in the air".

Lord Goldsmith acknowledged that peers may want to know more but said that as the matter concerned intelligence issues it was "not appropriate" for him to say more.

Ms Gun had been accused of leaking a memo in which a US National Security Agency official requested help from British Intelligence to tap the telephones of United Nations Security Council delegates in the run-up to the war in Iraq.

The details of the memo were made public by the Observer newspaper.