Key Points:

A sedition charge against the manager of Dunedin's Bowling Green Tavern, Mark Deason, is to be dropped by the police.

Mr Deason faced the rare charge after he printed a promotional Orientation Week pamphlet featuring offers to swap petrol for beer and a prize of a fuel-soaked couch.

These, and other offers in the "Licence to Burn 2007" pamphlet infuriated firefighters, police and other hoteliers, who believed the pub's publicity stunt intentionally sought to incite fires, riot and other illegal and dangerous behaviour.

The promotion did not go ahead in its original form after police seized 15,000 copies of the pamphlets at the bar before they could be delivered.

Mr Deason, 32, the general manager of the student bar, was charged with sedition in March and given a registrar's adjournment until yesterday for diversion, but late last month the diversion was rejected on legal advice from police national headquarters.

Dunedin police subsequently said they were reviewing the appropriateness of the sedition charge.

Senior Sergeant Steve Armitage, of the prosecutions team, confirmed police had decided not to prosecute on the basis there was insufficient evidence to prove the crime.

Police would make a formal application to the court to withdraw the charge. They would not lay any other charges.

Mr Deason said last night that he would not make any comment until after the charge had been formally withdrawn.

He was before the Liquor Licensing Authority last Friday after police and the Dunedin City Council applied to suspend or cancel his licence because his conduct made him unsuitable to be a licensee.

The judge reserved his decision.

The Law Commission recently called on Parliament to abolish sedition laws in view of the charge.

Commission president Sir Geoffrey Palmer said the archaic offence was too wide and unclear and had been used to muzzle unpopular political speech.