The matter was referred to the Attorney General’s office for a decision, after he failed to reveal his sources when called as a witness.
His story had named a prime suspect in the 1996 IRA Manchester bomb attack but he would not say where the information came from.
He could have been jailed for refusing a judge’s order to reveal the source and faced a contempt of court hearing.
It would have made Steve the only person to face a penalty after the terrorist outrage.
But the Attorney General has decided it is “not in the public interest” to prosecute.
Steve, now deputy news editor, was supported by the National Union of Journalists, and local MPs.
In a statement released through the union, he said: “I would like to thank the union and its members for their support and encouragement.
“This reinforces the fact that it is a matter of honour not to betray a source.
“All the messages of support were a great help to me and my family during a very stressful time. This is a massive relief.”
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