Sir Philip Green drops legal action against the Daily Telegraph over allegations of sexual harassment and racism

In a statement, Arcadia said: "After careful reflection, Arcadia and Sir Philip have reluctantly concluded that it is pointless to continue with the litigation which has already been undermined by the deliberate and irresponsible actions of Lord Peter Hain.”

The Topshop tycoon has described the reports of the allegations against him as “vicious personal attacks” and “untrue allegations”.

Despite dropping his action against the Telegraph, Sir Philip warned that there could be “further legal action” against anyone who had signed a non-disclosure agreement but decided to speak out.

Lord Hain responded: "Parliamentary privilege has always been resented by the rich and powerful when it is used as I did in this case to defend human rights and justice when under attack.

“It is of fundamental constitutional importance as the only absolute right to free speech cemented in our law.”