The South Shields businessman claimed the Beacon and Bents ward election in May last year was marred by voting irregularities.

Yesterday the businessman's solicitor, Simon Paget-Brown, told London's High Court he was withdrawing his challenge to the election result.

He told judge Mr Justice Tugendhat: "He simply no longer wants to proceed with the petition, it's as simple as that. The stress of it all got to him."

Mr Khan, from Julian Avenue, South Shields, launched a challenge to the May 2007 election result after he was beaten by Labour candidate Audrey McMillan by 33 votes.

He made a series of allegations of electoral irregularities - some of them relating to the handling of postal ballot papers - and petitioned the High Court to declare the poll result void.

One claim was that the Ocean View Community Centre had been an "inappropriate choice" as a polling station because Coun McMillan was chairman of the centre's management committee.

He argued that she was "not duly elected", and a fresh poll should be ordered.

However, Mr Khan won a seat on South Tyneside Council earlier this month, when he beat former mayor John Wood by 433 votes.

Coun Khan said: "The people of Beacon and Bents have seen the facts of the case for themselves and made up their own minds about how I was treated, and there isn't a better public endorsement than gaining a 400-strong majority.

"The court action was not in vain. It revealed that 18 ballot boxes containing rejected ballot papers had gone missing, which led to returning officer Brian T Scott making a public apology for the error.

"The court case put last year's election under the scrutiny the public expects, and even though the action failed, it's served an invaluable purpose for local democracy in South Tyneside."

Mr Paget-Brown told the judge, who was sitting with Mr Justice Cranston, that Mr Khan had agreed to pay £1,277 towards Ms McMillan's legal costs, and £3,445 towards the costs bill run up by the returning officer.

Mr Scott apologised for the loss of the ballot boxes in a statement released to the Gazette in March, but denied any fraud or wrongdoing.

He said the loss of the votes – which had been counted up until election night – had not affected the result.