Israel's attorney general decided today not to prosecute former prime minister Binyamin Netanhahu after a year-long investigation into allegations of bribery, theft and obstruction of justice, suddenly resuscitating Netanyahu's moribund political career.

The ruling cleared the way for a comeback by Netanyahu, the hawkish leader whose popularity has inched back up since he was resoundingly defeated in his reelection bid last year by Ehud Barak. Even before today's ruling, Netanyahu had led the struggling Barak in recent opinion polls, despite -- or because of -- his decision to leave the public stage after he left office in July 1999.

In a 22-page ruling, Attorney General Elyakim Rubinstein said the evidence against Netanyahu and his wife, Sara, was insufficient to carry "a reasonable chance of conviction" in a criminal trial. He nonetheless slammed Netanyahu's dealings, which included allegations that he and his wife received well over $100,000 in private services from a contractor in return for promises of political favors, and illegally kept several hundred valuable gifts while in office, 100 of which are still missing.

"Even if the weight of evidence does not meet the standard for a criminal conviction, it contains a degree of ugliness," Rubinstein wrote. "It is unthinkable that with the closing of this case, matters should be presented as if everything was proper and clean; far from it."

Rubinstein's ruling, which rejected recommendations of prosecution from Israeli police and the top prosecutor, came with a strong sense of deja vu for Netanyahu and the public. In 1996, Rubinstein closed an unrelated criminal investigation against Netanyahu, also for lack of evidence, thereby lifting a cloud over his first year in office.

Netanyahu, 50, who has prospered as a public speaker since leaving politics, was reported to be cutting short a trip to the United States to return to Israel on Thursday.

In March, in his only public comments on the case, Netanyahu said he was the victim of a politically motivated witch hunt by police investigators intent on "hunting me and my wife down." Today his allies in the Likud Party hailed the investigation's closure as proof that Netanyahu had been persecuted, although they were careful to sound contrite.

"There's no question mistakes were made," said Danny Naveh, a Likud legislator who was one of Netanyahu's close lieutenants. "I'm sure Netanyahu will learn from his mistakes. I'm sure as a result he'll be a better person and better suited for public life. The national camp needs a leader of his ability."

Although Netanyahu has said nothing publicly about his intentions, aides and allies have made little secret that they expect him to jump back into politics when the time is right. His first task would be to recapture the Likud leadership from Ariel Sharon, the hawkish septuagenarian retired general who is given little chance of beating Barak in a national election.

Labor Party politicians allied with Barak were circumspect about the decision, saying it spared Israel, and Netanyahu's family, the spectacle of a trial. But all noted that this is the second time Netanyahu has narrowly avoided a trial.

"Twice the police have recommended that he be indicted; twice he's gotten off," said Justice Minister Yossi Beilin, a Labor lawmaker. "I wouldn't recommend the Likud nominate such a man as its candidate for prime minister."

In a statement, Barak wished Netanyahu and his family a happy Rosh Hashana, the Jewish New Year that falls this weekend. "We all respect the attorney general's decision," the statement said.

The case against Netanyahu and his wife relied on the testimony of Avner Amedi, a contractor who said he was never paid for a variety of jobs and services. Police characterized the arrangement as a "give-and-take relationship" that was tantamount to bribery.