The European Union today welcomed Turkey's decision to end the prosecution of Orhan Pamuk, the country's best selling writer, but urged a wider reform of the country's free speech laws.

The case against Pamuk, charged with insulting "Turkishness" in a newspaper interview, was dropped today by an Istanbul court after the Turkish Justice Ministry declined to approve the charges against the writer.

Olli Rehn, the EU's Enlargement Commissioner, said the collapse of the case should lead to a "positive outcome" for the dozens of Turkish journalists and authors currently facing similar charges.

"This is obviously good news for Mr Pamuk, but it’s also good news for freedom of expression in Turkey," said Mr Rehn in a statement.

"Several journalists, editors, writers and academics still face similar charges today," he said.

"I hope therefore that the decision on Orhan Pamuk's case will pave the way for a positive outcome for them as well, so that freedom of expression for all Turkish citizens is fully respected."

"It is clear for me that Turkey needs to fill properly the loopholes of the current Penal Code, which leave too much room for abusive and restrictive interpretations limiting freedom of expression."

The prosecution of Pamuk, which began two months after Turkey opened membership negotiations with the EU in October, had outraged European Union officials and provoked questions over Turkey’s commitment to free speech.

The decision to drop the case was timely. This week, the EU is to begin a review of the country’s much criticised justice system. On Friday, Cimel Cicek, the Turkish Justice Minister in charge of the Pamuk case, admitted that his country had "shortcomings" in its laws.

Pamuk, from Istanbul, faced three years in prison for "publicly denigrating Turkish identity" under a law known as Article 301 after talking to a Swiss newspaper last February.

Pamuk told Tages Anzeiger: "Thirty-thousand Kurds and 1 million Armenians were killed in these lands, and nobody but me dares to talk about it." The massacres and ethnic cleansing that followed the First World War in Turkey are still deeply controversial.

Haluk Inanici, the author’s lawyer, broke the news of the trial's collapse this morning. "The court dropped the case," he said. "This case should not have been opened in the first place."

Pamuk, 53, is Turkey's bestselling writer. Mooted as a contender for the Nobel Prize for Literature, his best known books, My Name is Red, Snow and Istanbul, discuss Islam, Kurdish nationalism, European models of progress and the clash of ideas in modern Turkey.

His case provoked protests among both free-speech campaigners and hardline nationalists in Turkey, who pelted his car with eggs on its way to the court. One provincial governor ordered the burning of his books.

Today, Kemal Kerincsiz, a nationalist lawyer who argued for the prosecution of Pamuk said the decision to drop the charges was a shame.

"It is a scandal," Mr Kerincsiz told the Associated Press. "Orhan Pamuk must be punished for insulting Turkey and Turkishness, it is a grave crime and it should not be left unpunished."

But the Turkish Government, embarrassed at the international dismay surrounding the case, has gradually withdrawn from the prosecution of Pamuk.

This month the Turkish Foreign Minister, Abdullah Gul, admitted that the case had tarnished the country’s reputation and said that laws governing the freedom of expression would have to change.

Mr Cicek, the Justice Minister, first tried to persuade Pamuk to apologise for his comments before passing the trial to a local court and saying his ministry had no say over the proceedings.

• Mehmet Ali Agca, the hitman who shot and wounded Pope John Paull II in 1981 will remain behind bars until January 18, 2010, Turkish prosecutors said today. Agca was briefly freed earlier this month but re-arrested on Friday after the Turkish Supreme Court ruled that he should not have been released. Agca was extradited from Italy to Turkey in 2000 to serve a life sentence for the murder of a Turkish journalist, who he killed in 1979.

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