The Sun was the only British newspaper that ignored the PCC advisory note, and published the photos of the Prince cavorting nude with an unidentified woman in his hotel room in Las Vegas.
A St James’s Palace spokesman said: “Having considered the matter now for a number of weeks, we have decided not to pursue a complaint with the PCC on behalf of Prince Harry in respect of the photos of the Prince taken in Las Vegas. We informed the PCC yesterday.
“We remain of the opinion that a hotel room is a private space where its occupants would have a reasonable expectation of privacy.
“Prince Harry is currently focused entirely on his deployment in Afghanistan, so to pursue a complaint relating to his private life would not be appropriate at this time and would prove to be a distraction.
“We have concluded that it would not be prudent to pursue the matter further, and we will have no further comment to make about the matter.”
The decision from the royal family was made despite the 3,800 complaints already received by the PCC, and their previous threats of legal action based on the argument that the newspaper was in breach of the PCC code.
In an editorial, the Sun claimed there was a “clear public interest” in publishing the photographs “in order for the debate around them to be fully informed”.
It added: “The photos have potential implications for the Prince’s image representing Britain around the world.
“There are questions over his security during the Las Vegas holiday.Questions as to whether his position in the Army might be affected. Further, we believe Harry has compromised his own privacy.
“It is absurd that in the internet age newspapers like The Sun could be stopped from publishing stories and pictures already seen by millions on the free-for-all that is the web.”
While St James’s Palace has decided to take this incident no further, they are still pursuing a legal battle over the publication of topless photographs of the Duchess of Cambridge, which were published by the French edition of Closer magazine, and other titles in Sweden, Denmark, Italy and Ireland.