Tory MP Conor Burns has had the Conservative whip restored and will be reinstated as a Conservative member.
The Bournemouth West MP, 50, was sacked as trade minister in October following an allegation of “serious misconduct”.
A Conservative Party spokesman said the party concluded Mr Burns has no case to answer over a complaint that was made against him in early October.
Mr Burns described the last two months as “a living nightmare”, in an interview with the paper.
He said he was caught in the “crossfire of the dying days” of Liz Truss’s government, with him being “thrown to the wolves”.
He added: “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”.
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 is 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.”
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Mr Burns was sacked as trade minister just weeks before Ms Truss resigned as Prime Minister just 44 days after taking over from Boris Johnson.
The former Northern Ireland minister said he would co-operate fully with the probe.
Sky News analysis of House of Commons library data found that Mr Burns was set to receive a severance payment of £7,290 – three times his pro-rata salary of £2,602.
He has been an MP since 2010 and held a number of ministerial positions under Boris Johnson, to whom he was fiercely loyal.
