A photograph owned by Sir Elton John and seized from an exhibition as part of a child pornography probe is not an indecent image, the Crown Prosecution Service have said.

The image of two naked girls, taken by US photographer Nan Goldin, was seized last month, the day before it was due to go on display at the Baltic Centre for Contemporary Art in Gateshead, Tyne and Wear.

The CPS said that "the evidence is insufficient to justify proceedings for offences of possession or distribution of an indecent photograph". The controversial photograph, entitled Klara and Edda Belly-Dancing 1998, was among 149 Goldin images owned by Sir Elton. Northumbria Police took it away for examination to determine whether or not it breached pornography legislation. The CPS first considered the image in 2001, when it was deemed not to be an indecent image.

Explaining the new decision, Kerrie Bell, head of the CPS Northumbria South Unit, said: "In order to prove that the photograph is indecent we must be satisfied that contemporary standards of propriety are so different now to what they were in 2001, that it is more likely than not that a court will conclude that the photograph is indecent. I am not satisfied that is the case. "Even if the photograph was now considered to be indecent, a defendant would be able to raise a legitimate defence, given that the photograph was distributed for the purposes of display in a contemporary art gallery after having been deemed not to be indecent by the earlier investigation. "Accordingly, I am of the opinion that the evidence is insufficient to justify proceedings for offences of possession or distribution of an indecent photograph."

The photograph has been exhibited all over the world and offered for sale at Sotheby's New York in 2002 and 2004. But it has long been the subject of debate over whether the image is too explicit.