Unite has been cleared of attempting to rig the selection of a Labour candidate in Falkirk by a party inquiry.

Karie Murphy, who was backed by the union, has been reinstated to the party but said she has withdrawn from the race for the seat for the sake of “reconciliation and unity.”

A Labour spokesman said “key evidence” had been withdrawn from the inquiry, believed to relate to claims people were signed up as party members without their knowledge in a bid to stuff the constituency with Unite supporters.

“No organisation or individual has been found to have breached the rules as they stood at the time,” he said.

“The general secretary has determined that given these circumstances Scottish Labour should move to select its candidate for Falkirk.

The dispute sparked a furious row between Labour leader Ed Miliband and union leaders, with Unite firmly denying any wrongdoing.