Relief in Blair's inner circle at UK probe decision

LONDON, July 20 (Reuters) Aides to former British Prime Minister Tony Blair voiced relief today at reports that no one will be charged following a 16-month police inquiry into alleged political corruption.

State prosecutors would not confirm reports that they will announce later today their decision not to file charges after the probe into the alleged illegal sale of state honours.

Gordon Brown, who succeeded Blair as prime minister on June 27, declined comment until prosecutors announced the outcome of the investigation into what Brown said were ''very serious allegations''.

He hoped the announcement would ''bring an end to what has been months of speculation.'' ''We should move ahead to try and get a better system of political funding in our country,'' Brown told a news conference with French President Nicolas Sarkozy in Paris.

The closure of the probe without charges would be a boost for the ruling Labour Party, which has taken the lead in opinion polls since Brown replaced Blair and which held on to two parliamentary seats in by-elections yesterday.

The reactions of people involved in the inquiry which dogged Blair's final months in office suggested they had been informed there would be no charges.

A spokesman for Blair, named special envoy by the Quartet of WAsia peace mediators, had no immediate comment.

Lord Michael Levy, Blair's former chief fundraiser and a central figure in the investigation, promised a statement later in the day but was smiling broadly as he talked to reporters.

Asked if he was relieved, he said: ''I'll let you decide. I think my face tells how I feel ... I feel very well.'' ARRESTS Detectives have been investigating since March last year whether political parties nominated people for state honours that come with seats in parliament's unelected upper house, the House of Lords, in return for cash.

Levy was first arrested in July 2006 as part of the party funding probe and again in January this year on suspicion of conspiracy to pervert the course of justice. He was released on bail each time.

Ruth Turner, a former top Blair aide, and Christopher Evans, a biotechnology tycoon and wealthy Labour Party backer, were also arrested and bailed.

None were charged and all denied wrongdoing.

Prosecutors have been considering whether there is enough evidence to bring charges since April when police wrapped up their inquiries after interviewing 136 people.

Blair was questioned three times as a witness, the first serving prime minister quizzed in a criminal investigation.

John McTernan, a former close aide to Blair, said the last 16 months had been gruelling for those in Blair's inner circle, who were ''really relieved this is over''.

''We've been vindicated,'' he told the BBC.

Angus MacNeil, the Scottish Nationalist politician whose allegations triggered the police inquiry, described the reports that no charges would be brought as ''extraordinary'' and said it would leave many questions unanswered.

The inquiry damaged Blair's reputation -- already battered by the war in Iraq -- and many observers believed it contributed to the pressure from his party to leave office early after a decade as Prime minister.

Reuters CS GC1656