Ex-Minister Conor Burns has had the Tory whip restored after being cleared of "serious misconduct".
He was sacked as a trade minister by Liz Truss and was suspended from the Conservative Parliamentary Party, following a complaint about his behaviour at the party's Birmingham conference in October.
But in a statement today, the party said that after reviewing all the available evidence it had concluded there was "no basis on which to investigate further" and that the matter was closed.
It was reported that a witness had claimed to have seen him touching the thigh of a young man in a hotel bar.
The MP for Bournemouth West expressed relief at the finding.
He said he had been confident he would be cleared but that the past two months had been a "living nightmare" - particularly for his elderly parents.
Speaking to his local paper, the Daily Echo, he said: "I knew that I would come out the other side of this and my name would be clear because there was nothing to what had happened.
"I knew I was innocent and the truth will out and it has."
Mr Burns said he believed he had been the victim of a "stitch up" because of complimentary remarks he made about Trade Secretary Kemi Badenoch who was one of Ms Truss's rivals for the Tory leadership over the summer.
"I think this all had become more to do with nice things I had said about the Trade Secretary than about being up late at the conference," he said.
"It felt and smelt like a stitch up and that it what it was."
In a statement, a Conservative Party spokesman said: "The party received a complaint and investigated in line with its code of conduct.
"After undertaking appropriate inquiries and reviewing all of the evidence available to establish the facts, the party concluded that there was no basis on which to investigate further.
"The matter is now closed and Mr Burns's membership will be reinstated at the nearest possible opportunity."
