Computer hacker Gary McKinnon, whose extradition was sought by the US authorities, will not be prosecuted in Britain, the director of public prosecutions confirms.
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The announcement follows a review of the case after the government blocked his extradition to the US in October on health grounds.
Mr McKinnon, 46, suffers from Asperger's syndrome and could have faced up to 60 years in prison if he was convicted. He was permitted to stay on human rights grounds after medical reports showed he was very likely to try to kill himself if extradited.
He was accused of hacking into US military and Nasa computers over a 13-month period.
Prime Minister David Cameron held talks on the case with Barack Obama and Nick Clegg has previously spoken out against plans to extradite him to the US.
Mr McKinnon's lawyer Karen Todner said: "I have mixed feelings about this - I am pleased he is not going to be prosecuted because I wouldn't want to think he would ever spend any time in prison given his mental situation.
"But I am disappointed because the extradition warrant is still outstanding because he can't travel anywhere outside of the UK and will have this hanging over him until it's resolved.
"Mr McKinnon has always indicated that he would be willing to plead guilty to an offence under the misuse of computers act but clearly cannot do so if he is not going to be prosecuted.
"Mr McKinnon's legal team remains aware that his extradition warrant is still outstanding and will seek to explore other ways in which Mr McKinnon can receive complete closure on this long saga."
Lawyers have discussed approaching US president Obama for a pardon.
Mr McKinnon's mother, Janis Sharp, said: "I feel fantastic, it's just wonderful. The next thing I would like to get, impossible though it seems, would be a pardon from President Obama.
"I feel the 10 years have been gruelling, it's been life-destroying. It's difficult to explain how bad it's been.
"To have this over is amazing. Gary's gone through enough. Other people have been accused of more serious hacking in this country and they've been given a £1,000 fine and a very short community sentence.
"Gary regrets what he's done. He wishes he hadn't done it. He wishes he hadn't upset the Americans. We all regret it. But I'm grateful to Theresa May that this is all over now."
In an October statement, a spokeswoman for the US Department of Justice complained: "The United States is disappointed by the UK home secretary's decision not to extradite Gary McKinnon, particularly given the past decisions of the UK courts and prior home secretaries that he should face trial in the United States.
16 October 2012