THE company that brought the Ghost Ships to the North-East will not be prosecuted, despite failing to scrap them within 180 days, as required.

The Environment Agency announced yesterday that it would not take enforcement action against Able UK because it was not in the public interest.

Able UK could have faced an unlimited fine for not dismantling the rusting US Navy vessels, which are docked at Graythorp, near Hartlepool.

But Craig McGarvey, the Environment Agency's area manager, said environmental monitoring showed the ships did not pose "a significant threat to the environment or human health".

He said dismantling of the ships at Graythorp was still the best option, as long as Able UK could obtain permission to start work.

Mr McGarvey said: "The current position is that the ships are stored safely and Able UK is working with the various authorities to apply for permission to dismantle the ships.

"In light of this, we have concluded that it would not be sensible to take enforcement action while Able is attempting to rectify the situation."

He said with 95 per cent of the material in the ships capable of recovery and recycling, there were "environmental benefits to be gained from this type of dismantling".

The rusting vessels have caused uproar from campaign groups and residents, who say they are toxic timebombs carrying harmful materials, including asbestos.

Friends of the Earth and residents launched legal challenges to the work and obtained court injunctions preventing the ships from being dismantled.

Able UK has been told it cannot carry out any work until it receives planning permission, a waste management and, possibly, a licence for construction on the seabed.

Yesterday's announcement was made as the Environment Agency urged the Government to introduce national guidelines to prevent a repeat of the Ghost Ships saga.

Last month, a U-turn by Environment Minister Elliot Morley provoked anger when he said the ships should be dismantled in Hartlepool. In an earlier, emergency Commons debate Mr Morley had said: "The Government's position is clear - that these ships should turn back."

Richard Ottaway, Tory environment spokesman, said: "The Environment Agency's report shows that the Government's handling of the Ghost Fleet saga was a complete shambles."

Read more about the Ghost Ships here.