A Turkish court dropped criminal charges against best-selling author Orhan Pamuk on Monday, a defense lawyer said, in a move which the European Union described as ``good news'' for freedom of speech in Turkey.

The trial had cast a shadow over the Muslim country's drive to join the 25-nation EU bloc after it began membership talks last October.

``The court has decided to drop the case. There will not be a hearing... because there is no need for that,'' lawyer Haluk Inanici told Reuters.

``This is obviously good news for Mr Pamuk, but it's also good news for freedom of expression in Turkey,'' EU Enlargement Commissioner Olli Rehn said in a statement. He hoped this would open the way for a ``positive outcome'' in other cases in Turkey.

Pamuk, seen by many as a Nobel Literature Prize contender, was charged under article 301 of a new penal code, which forbids insulting Turkish identity.

The EU has called on Turkey to amend the article which has allowed nationalist prosecutors, to the government's discomfort, to put Pamuk and scores of other writers and academics on trial for insulting ``Turkishness'' or state institutions.

Pamuk upset nationalists by telling a Swiss newspaper last year nobody in Turkey dared mention the killing of a million Armenians during World War One or 30,000 Kurds in recent decades.

The lawyer said the court dropped the case after the justice ministry failed to give permission for it to go ahead, as was required under the country's old penal code. He added that the ruling was not binding for other similar cases.

Diplomats said Turkey handled the case badly by allowing it to go to court in the first place and failing to take a clear stance on the issue -- leaving Ankara open to a barrage of international criticism.

The Istanbul court adjourned Pamuk's trial shortly after it began on December 16 and asked the justice ministry for a legal opinion on whether he could be tried under the new penal code. The next hearing had been due on February 7.

Pamuk's best-selling novels include ``My Name is Red'' and ''Snow.'' His novels deal with the clash between past and present, East and West, secularism and Islamism -- problems at the heart of Turkey's struggle to develop.

EU CONCERNS

The EU has said the case raises concerns over freedom of speech in Turkey, which last October began what are expected to be lengthy EU membership talks.

``It is good the case has apparently been dropped, but the justice ministry never took a clear position or gave any sign of trying to defend Pamuk,'' said one Ankara-based EU diplomat.

The diplomat noted that dozens other writers, journalists and academics face similar charges as Pamuk under Article 301 but their fate remained unclear.

``The decision does not clear the doubts we have about the government's commitment to reforms, but at least it gets out of the way a case which had been very damaging to Turkey's image,'' the diplomat said.

Discussing the killings of Armenians in World War One is highly sensitive in Turkey. Ankara rejects charges that Ottoman forces committed genocide against Armenians, but under EU pressure has called on historians to debate the issue.

``(Justice Minister Cemil) Cicek has ducked the issue. He did not say 'I have no right to give permission because Pamuk has committed no crime'. He is sending out very mixed messages,'' another EU diplomat said.

``So we would see this ruling as positive but there is still some way to go on freedom of expression issues.''

If convicted Pamuk, 53, could have faced up to three years in jail, although similar prosecutions in the past have more often resulted in fines, acquittals or reprieves.

The new code improved women's rights and imposed tougher penalties for rape and torture, but for many in the EU it does not go far enough.