Germany has dropped attempts to prosecute one of the Russians accused of involvement in the assassination of the Kremlin critic Alexander Litvinenko.

In a blow to Britain’s efforts to extradite the former KGB officer Andrei Lugovoy to stand trial for murder, German prosecutors closed their case against his business partner Dmitri Kovtun.

Mr Kovtun, a former Soviet military intelligence officer, had been accused of illegally transporting radioactive material into Germany. He and Mr Lugovoy met Mr Litvinenko at London’s Millennium Mayfair hotel on the day that he was poisoned with radioactive polonium-210 in November 2006.

Mr Kovtun had travelled to the London meeting from Moscow via Hamburg. German police subsequently found traces of polonium-210 at the homes of his former wife and mother-in-law and in a car used to collect him from Hamburg’s airport.

His lawyer, Wolfgang Vehlow, said that prosecutors in the city had now notified him that “the criminal case in Germany has been closed”. Mr Kovtun said that Britain should call off its pursuit of Mr Lugovoy, who is now a member of Russia’s parliament.

“I always believed that the case against us was a bit too thin and doctored up by certain circles in England, and as the German experience shows, fell apart like a snowball when examined impartially,” he told the Ria Novosti news agency.

Mr Lugovoy said that Germany’s decision had undermined Britain’s case against him. He has accused the British Secret Service of trying to recruit him through Mr Litvinenko and claimed that MI6 was behind the murder.

“We demand that London conduct a new and impartial investigation into the Litvinenko case in these new circumstances. The provocation has failed, and it is time to switch from criticism to constructive steps in the Litvinenko case,” he said.

Both men have denied any involvement in Mr Litvinenko’s death. Mr Kovtun said: “I am grateful for the unprejudiced handling of my case in Germany. I also hope the British authorities will do the same with regard to Lugovoy.” The development came after the Kremlin rebuffed a fresh call to hand over Mr Lugovoy during David Miliband’s visit to Moscow, the first by a British Foreign Secretary in five years. Russia insists that its Constitution bans extradition of citizens.

Mr Lugovoy said that he was willing to travel to London “under certain conditions” to meet the Crown Prosecution Service, which charged him with murder after a Scotland Yard investigation. Detectives travelled to Moscow to interview both Mr Lugovoy and Mr Kovtun, who was receiving hospital treatment for radioactive contamination at that time.

One leading German analyst suggested the closure of the case against Mr Kovtun could improve political relations between London and Moscow. Alexander Rahr, programme director at the German Council on Foreign Relations, told Russia Today television: “If the Germans say they do not want to have Kovtun in prison or have him extradited to Germany, then for the same reason Britain can also say no to its former claims.”

Times Recommends

• 'New York has lost its edge'
• Copenhagen will fail – and quite right too
• More than 17,000 new underwater species found