The family of a soldier from Staffordshire killed by friendly fire in Iraq has dropped its legal challenge to the Army’s decision not to take action against a senior officer.

Corporal Stephen Allbutt, a 35-year-old father-of-two, from Stoke-on-Trent was killed by friendly fire in Basra in March 2003, a few days after British troops first went into Iraq.

At an inquest into his death in July 2007, the coroner was critical of commanding officer Lieutenant-Colonel Lindsay MacDuff and said he did not accept the officer’s evidence that he had broadcast Cpl Allbutt’s position over the radio and received acknowledgement from the platoon.

In May 2008, Cpl Allbutt’s wife Deborah launched judicial review proceedings against the Ministry of Defence, attacking as unreasonable the decision not to take disciplinary or administrative action against Lt-Col MacDuff.

The MoD fought the claim on the basis that the decision was appropriate as the reviewing officer considered it impossible - without evidence to the contrary - to prove that Lt-Col MacDuff, who twice gave evidence on oath, had not sent the message.

Lawyers for the Allbutt family, who were funded by the Legal Services Commission, told Mr Justice Pitchford at London’s High Court that the decision to discontinue was taken in the light of material disclosed by the MoD which showed that the reviewing officer had listened to the tapes of evidence given at the inquest before taking his decision.