NO action will be taken against the demonstrators who waved placards saying "Pope go to Hell" and "Jesus is the slave of Allah" outside Westminster Cathedral.
The Met launched an investigation after about 100 British Muslims protested against comments made by the Pope earlier this month.
About 25 complaints were made to police following the demonstration, but Commissioner Sir Ian Blair today said the protesters had not broken any law.
Sir Ian told the Metropolitan Police Authority that "no substantive offence" had been uncovered in the investigation and nobody would be questioned or charged.
"It is the job of the Met to hold the line of the freedom of speech," he said. "I am satisfied that there was no offences committed by anybody."
He said comments made by Anjem Choudary, former UK head of the controversial Islamic group Al-Mahajroun, which were quoted in the media, were not made at the public protest.
Mr Choudary, from Ilford, was quoted to have demanded capital punishment for anyone who criticises the teachings of the prophet Muhammad.
The demonstration followed a speech by Pope Benedict XVI, in which the Pontiff appeared to associate Islam with violence by quoting a medieval emperor.
Police stepped up patrols outside the capital's churches and mosques amid fears of a violent backlash against the comments.
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