Boris Johnson has been cleared of breaking the Tories' code of conduct with comments he made about women wearing burkas.
He had written that they looked liked "letter boxes" or "bank robbers" in a Telegraph column in which he argued against a ban on full-face veils.
It prompted dozens of complaints but it is understood an independent panel said he had been "respectful and tolerant".
Tory chairman Brandon Lewis and Theresa May had called on him to apologise.
Responding to the news, the Muslim Council of Britain, an umbrella body for 500 mosques, schools and associations, said it failed to see how Mr Johnson's comments "were 'respectful' and 'tolerant' as the panel has concluded".
The group claimed Mr Johnson's column had led "to copycat verbal assaults against Muslim women".
The founder of the Conservative Muslim Forum, Lord Sheikh, wrote to Mr Lewis after Mr Johnson wrote the column in August, demanding "serious action".
The Conservative Party has been accused of not doing enough to tackle anti-Muslim prejudice in its ranks, despite an initiative to boost tolerance and diversity.
The party's code of conduct states that Tory officials and elected representatives must "lead by example to encourage and foster respect and tolerance" and not "use their position to bully, abuse, victimise, harass or unlawfully discriminate against others".
The complaints were looked at by an independent panel which could have referred Mr Johnson to the party's board, which has the power to expel him. But the panel has cleared him of breaching the code.
Friends of the former foreign secretary said the inquiry had found his newspaper article fostered "respect and tolerance" for the wearing of the burka. The Daily Telegraph also quotes allies of Mr Johnson urging Brandon Lewis to apologise.
A Conservative Party spokesman said: "The investigation into complaints received regarding an article written by Mr Johnson has concluded.
"A panel, chaired by an independent QC, concluded that there had been no breach of the code.
"No further action will be taken."