Alan Lewis, 75, a Conservative Party vice chairman, had always maintained his innocence and was said to be “immensely thankful” for the support he had received from family and friends since his arrest in September.
The self-made tycoon, who owns the Crombie clothing chain and is thought to have a fortune of between £220m and £260m, was appointed as vice chairman of the Conservatives by David Cameron, who gave him responsibility for the party’s relations with business.
A Crown Prosecution Service (CPS) spokesman said: “The CPS has carefully considered the evidence gathered by Greater Manchester Police in relation to their investigations into an allegation of rape in the Manchester area in 1967.
“A 75-year-old man was arrested in September in connection with the allegation.
“The case has been reviewed by two specialist rape prosecutors in CPS North West Area in accordance with the Code for Crown Prosecutors, the CPS policy for prosecuting cases of rape and CPS legal guidance on rape and sexual offences.
“We have concluded that there is insufficient evidence for a realistic prospect of conviction in relation to the allegation and have advised Greater Manchester Police that no further action should be taken.
“The complainant has been informed of the decision and we will be meeting her to provide an explanation of the decision and to answer any questions she may have.”
A spokesman for Mr Lewis said: “Alan Lewis has always maintained his innocence in the face of these allegations, and he is immensely thankful for the unwavering support he has received over the last seven weeks from family, friends and colleagues.”