"Pending a review by police, prosecutors deem it unwarranted to prosecute Thaksin and Wissanu," prosecution spokesman Atthaphol Yaisawang said.

Many civic groups, including a loyalist group of law professionals, initiated the legal proceedings, charging the two men for offending the monarchy when they chaired a religious ceremony at the Temple of the Emerald Buddha last April.

His accusers contended that Thaksin had offended the monarchy by holding the ceremony inside the temple, one reserved for the royal family. Wissanu was one of the event's key organisers.

Atthaphol said the decision against prosecuting would still be scrutinised by National Police chief General Kowit Watana. Attorney-General Patchara Yutithamdamrong will have the final say on the matter if Kowit's decision is at odds with the prosecutors, he added.

In another development, prosecutors made differing decisions on two cases involving industrialist Prachai Leophairatana.

In the first, Prachai will be prosecuted for defamation relating to his remarks made about the Privy Council in the wake of a court hearing on the TPI group's rehabilitation plan in May 2004. In the second case, prosecutors cited a lack of motive as grounds not to prosecute Prachai for lese mejeste relating to his remarks after the hearing.