Peter Mailer, landlord at the Black Bull in Warkworth, was arrested in February for a second time, after displaying newspaper clippings and political paraphernalia in the bar, which police believed to be racist.

But on Saturday, Mr Mailer was told there would be no charges and the case was dropped.

He said: "They chucked it out, I'm a free man. They said there was no case to answer."

Mr Mailer admits he supports the British National Party but always denied he had done anything wrong. He says that the items displayed on his wall were not racially motivated or offensive and always believed that nothing would come of the allegations.

He said: "They were very short with answers and just said that the Crown Prosecution Service (CPS) had decided that there was no case to answer. I knew there was nothing there. I was pretty confident that it would get thrown out and it has been."

Mr Mailer was first arrested in December last year, after Northumbria Police received a complaint from a senior Nottingham policeman that material on display in the pub constituted a race-hate offence.

He was arrested again in February after an anonymous letter to police.

Alnwick neighbourhood inspector Sue Peart said: "We are obliged to investigate any complaints we receive and after a thorough investigation and discussions with the CPS the decision was made to take no further action."