Four Labour peers met undercover reporters posing as lobbyists
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The police will not investigate allegations against four members of the House of Lords accused of being willing to change laws in exchange for cash.
The Lib Dems referred the matter to police after newspaper allegations raised questions about the conduct of four Labour peers earlier this month.
But after consulting with the Crown Prosecution Service, the Metropolitan Police has decided against an inquiry.
A Lords committee is looking into the allegations against the four men.
The Sunday Times reported that the four peers - Lord Truscott, Lord Taylor of Blackburn, Lord Moonie and Lord Snape - had discussed being paid for amending laws in Parliament in a series of meetings with journalists posing as lobbyists.
The four denied the allegations which would have been a clear breach of parliamentary rules - which state peers should not seek to influence legislation in return for money.
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The application of the criminal law to members of the House of Lords in the circumstances that have arisen here is far from clear
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Over the past few weeks, the police have been examining material relating to the case, particularly the allegations against Lord Truscott - a former energy minister and Lord Taylor of Blackburn, who has been a peer for more than 30 years.
The Sunday Times released details of conversations the two men had with their reporters in which they discussed what help they might give them and how parliamentary procedure worked.
In a statement, the Met said it had looked at whether it could mount a criminal investigation into the possible offences of bribery and misconduct in public office.
'Difficulties'
It said its decision not to proceed was taken after considering the prospects for obtaining evidence and whether an inquiry constituted the best use of police resources.
It has also decided not to investigate allegations about the conduct of four other peers, made in the days after the original Sunday Times report, subsequently referred to it.
"The application of the criminal law to members of the House of Lords in the circumstances that have arisen here is far from clear," it said.
"In addition, there are very clear difficulties in gathering and adducing evidence in these circumstances in the context of parliamentary privilege."
In reaching the decision - which it will review if new evidence emerges - the Met said it had taken into the account the fact the Lords would be mounting its own "robust" investigation into the peers' conduct.
Baroness Royall, Labour leader in the Lords, has vowed to get to the bottom of what she says are "very serious" allegations.
The Committee on Lords Members' Interests is to investigate the allegations.
Opposition parties have called for tougher sanctions against peers who flout the rules including their suspension and ultimate expulsion from the House - something the government has said it is considering.
The Lib Dems said the decision not to conduct an inquiry was "disappointing".
"It is simply false to say that internal procedures will be able to deal with these cases, given that there is not even a mechanism for expelling miscreants," said its home affairs spokesman Chris Huhne.
At the moment, unlike in the Commons, the severest sanction a peer faces if they break the rules is to be named and shamed on the floor of the House.
The decision not to conduct an inquiry was taken by Assistant Commissioner John Yates, who led the inquiry into the cash-for-peerages allegations in 2006 and 2007.
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