The case had been brought against one-time Orton with Hampton councillor Garry Parker, who was charged with four counts of "evasion of liability by deception", between July 2003 and June 2006.

Mr Parker, who now lives in Helsinki, Finland, said he lived alone at his city home in Beaumont Way, Hampton Hargate, and that his wife was not a permanent resident there, meaning he was entitled to a 25 per cent reduction in his council tax bill.

A long-running investigation, which began in June 2006, examining whether or not visits from Mr Parker's wife Maria, breached the rules ended yesterday when the criminal case against him was dropped at Huntingdon Crown Court.

It came two months after a civil Valuation Tribunal Committee, an independent body that hears appeals against council tax liability, found Mr Parker was entitled to claim the discount.

Speaking after yesterday's decision, Mr Parker said: "I want a full public apology from the city council and will be claiming substantial damages."

Saying that the allegations had caused embarrassment to himself and his family, had left a stain on his character and had damaged his potential earnings, Mr Parker added: "I did a Google search on my name and found I am on a BNP list of dodgy councillors."

Mr Parker, who had to serve the last four months as a councillor on the independent benches, said: "I found myself trying to do my civic duty as a councillor, but that became virtually impossible towards the end.

"By profession, I am a public affairs lobbyist. To do that work, rather like being a journalist, you need to have a good reputation, and the case damaged my reputation."

The council's head of communications, Caroline Parsons, said: "When we referred the case to the police, we had evidence that backed up the allegations.

"We believed there was a case to be heard. The council has a duty to protect taxpayers' money."

The council's director of strategic resources, John Harrison, said: "When we believe that there is a matter that may have resulted in inappropriate use of taxpayers' money, then, in all cases, we refer evidence to police.

"The way we have dealt with former councillor Garry Parker is no different to how we would have dealt with any other case."

in 2006, Mr Parker was twice interviewed under caution, prior to being charged with four counts of "evasion of liability by deception".

Mr Parker, who represented Orton with Hampton between May 2004 and May 2007, had the Conservative whip withdrawn in January 2007, but he was not expelled from the national party.

At the time, former councillor David Thorpe, chairman of the North West Cambridgeshire Conservative Association, had cited Mr Parker living in Finland as the reason.