The 16-month cash-for-peerages investigation, which overshadowed the end of Tony Blair’s premiership and eroded public trust in the Government and Labour, will not result in criminal charges, it was widely reported last night.

Senior figures close to the investigation said it was “highly unlikely” that a successful prosecution could be mounted against those in the frame: Lord Levy, Mr Blair’s chief fundraiser, Ruth Turner, No 10’s former director of communications and Sir Christopher Evans, the bio-tech tycoon.

This follows consultations between lawyers in the Crown Prosecution Service and the police. The final announcement about whether the CPS will bring charges is expected to come today. Last night the lawyers refused to confirm that a decision had been reached.

A source with knowledge of the investigation said: “The sticking-point has been the admissibility of evidence obtained by the police. The bar has been raised incredibly high because of the sensitivities.”

Police are expecting a huge backlash from politicians furious at the handling of the investigation, which was launched after it was revealed that Labour had funded its 2005 election campaign through secret loans.

John Yates, the Assistant Commissioner of the Metropolitan Police who headed the investigation, was last night preparing to make a statement defending the actions of his team.

The documentation obtained by police runs to thousands of pages and sources close to the investigation maintained that it revealed the existence of many discussions between members of Mr Blair’s administration about who should be awarded peerages.

It is understood that much of the evidence could still be released if requested by the Public Administration Committee, which will have to decide whether such a move is in the public interest or whether it would smear the reputations of those against whom the police failed to mount a case.

Mr Blair’s former director of political operations, John McTernan, who was interviewed under caution by police during the inquiry, said last night that he and his colleagues were “massively relieved”.

However, opposition politicians said that many questions remained unanswered. Angus MacNeil, the Scottish Nationalist MP who made the initial allegation that four wealthy individuals had been nominated for peerages after lending Labour large sums of money, said that it would be “extraordinary” if no charges were brought.

Sir Menzies Campbell, the Liberal Democrat leader, said: “This whole affair has diminished politics and politicians in the eyes of the public. Never again must there be any question of a link between preferment and financial support.”

It is understood that police at the centre of the inquiry have been informed that there will be a formal announcement within the next five days. Lord Levy had been scheduled to report to the police for bail on Tuesday.

Mr Blair has long pledged to give his side of the story once the investigation was completed. He was angered by the damage that was caused to his reputation in his final months in office.

Complaints against the police are likely to focus on three areas. Many were unhappy that the investigation lasted as long as it did, with the investigation dramatically widening before Christmas after The Times was told that they suspected some individuals were involved in a cover-up.

Second, there was fury within No 10 and Parliament that police appeared to adopt such a high-profile approach. Mr Blair faced the humiliation of becoming the first holder of his office to be questioned by police conducting a criminal investigation.

He was interviewed three times and Ms Turner was arrested in a dawn raid. Detectives interviewed a total of 136 people, including members of the Conservative Party and gave the CPS reports and 6,300 documents.

There were also concerns over the leaks as the inquiry unfolded – although briefing is thought to have been undertaken by all sides during the course of the probe.

The police are likely to defend their conduct vigorously and say they acted as they would with any inquiry.

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