Derek Conway, the disgraced Conservative MP, is to escape a criminal investigation into his misuse of Commons expenses, police have confirmed.

Despite the wish of Sir Ian Blair, the Metropolitan Police Commissioner, to launch an inquiry the Crown Prosecution Service’s advice was that an investigation was impractical.

They blamed the “lack of systems” put in place by the Commons for monitoring the payment of MPs’ allowances, in a move that is likely to intensify pressure for reforms to rules for MPs’ expenses.

In a statement, the Metropolitan Police said: “The CPS advised us today that they are of the view that the lack of systems in this case to account for MPs expenses would severely undermine the viability of any criminal investigation leading to a prosecution. In these circumstances we do not believe that it is appropriate for a police investigation to be instigated.”

The decision follows an unusual stand-off in which Sir Ian voiced his frustration last month at the reluctance of the House of Commons authorities to refer the case to his force.

He accused John Lyon, the parliamentary commissioner for standards who investigates complains against MPs, of ignoring a protocol under which police were called in to take up the most serious cases, and revealed that he had written to Mr Lyon asking for such a referral in Mr Conway’s case.

Mr Lyon’s office insisted he had followed the established procedure under which he and Sir George Young, the Conservative MP who chairs the Commons Standards and Privileges Committee, did consider whether to report Mr Conway to police but decided against doing so.

Police received a formal response from Mr Lyon last week, in which he appears to have insisted that the allegations were already investigated by him and put before the Standards and Privileges Commons, who recommended their own sanctions.

Throughout, Mr Conway has maintained he did nothing wrong despite paying his son £40,000 from Commons allowances to work as his researcher, including bonuses that breached recommended rates, when he was a full-time university student and being able to produce barely any evidence of any work he did.

Mr Conway has served the 10 day suspension from the Commons ordered by Sir George’s committee and will remain an MP until the next general election, although he has kept a low profile in Parliament since the scandal.

He has not spoken in the Commons chamber since late January, when he was forced to apologise for his behaviour prior to his suspension, and has voted only nine times out of 69 divisions since, according to the website Theyworkforyou.com, although he has signed a series of Commons motions.

Many MPs remain furious with him for triggering a wave of hostile media reports highlight the system of MPs expenses which has prompted a series of reviews and plans to require MPs to declare whether the employ members of their family.

MPs will have to state in the Register of Member’s Interests any relatives on their staff and a brief job description, although details of their salary band will be published separately.

The move, which will be put to MPs in a formally vote for approval, will take effect from August 1, although a voluntary registration system will be in place from April 1.

The four month transition period is slight watering down of transparency rules and may allow MPs time to end arrangements under which they have paid family members.

Under the plans, MPs will have to register any employee related to them by blood, by marriage or by a partnership equivalent to marriage who is paid more that £618 in a year, one per cent of a parliamentary salary. The requirement to register would continue for three years after the end of a marriage or relationship.

Times Recommends

• Oh no, Mr Darling: you have failed
• BBC survives dogfight over Kennel Club expose
• Where the Rosetta belongs can’t be set in stone