But Scotland Yard will investigate allegations over cases rendition to Libya, which will put paid to foreign secretary William Hague's plan to "draw a line under the issue."
Two Libyans who were part of the anti-Gaddafi movement are threatening to sue the UK over their transfer to Libya and subsequent torture.
Abdel Hakim Belhaj, a commander of the rebel forces in Libya, says he was tortured after being arrested in 2004. He says he was taken from Bangkok to Libya by a joint CIA and MI6 operation which was set up to help Col Muammar Gaddafi round up his enemies.
In the second Libyan case, Sami al-Saadi has made similar allegations of British collusion in rendition and is demanding damages for the torture he claims he suffered in one of Gaddafi's prisons.
In a joint statement with the CPS, the Metropolitan Police confirmed it was looking at the two cases.
Deputy Prime Minister Nick Clegg reacted by saying: "This government condemns torture and inhumane treatment.
"We will never support it, we won't ask other people to do it on our behalf," he added.
But Clive Stafford Smith, director of legal group Reprieve, said: "Evidence of British complicity in the torture of Libyans Sami al Saadi and Abdul Hakim Belhaj by the Gaddafi regime is so blatant that a criminal inquiry must go ahead."
Meanwhile, MI5 and MI6 agents will not face charges over the ill-treatment and torture of UK resident Binyam Mohamed in Pakistan and another detainee at Bagram Air Base in Afghanistan, Director of Public Prosecutions Keir Starmer QC said.
Thee CPS (Crown Prosecution Service) concluded that there was insufficient evidence to prove that any spies provided information when they "knew or ought to have known that there was a real or serious risk that Mr Mohamed would be exposed to ill-treatment amounting to torture".
"Against that background, it is not possible to bring criminal charges against an identifiable individual," the statement said.