The Crown Prosecution Service (CPS) said today that there was "insufficient evidence for a realistic prospect of conviction" of Wallis.
On his Twitter page, the journalist posted: "After 21 months of hell for my family, CPS have just told my solicitors that there will be no prosecution of me."
Wallis was arrested in 2011 on suspicion of conspiracy to intercept communications contrary to the Regulation of Investigatory Powers Act 2000.
The Metropolitan Police's Operation Weeting investigation into alleged phone hacking by journalists handed his file, and those of 12 others, to the CPS in summer 2012 to see if any formal charges could be brought.
At the time, the CPS concluded that eight suspects should face charges, including two former editors of the now defunct Sunday tabloid, Rebekah Brooks and Andy Coulson.
It was judged that three files had no realistic prospect of a conviction, but the case of Wallis and another ex-News of the World journalist were deferred while police made further investigations.
Wallis's file was resubmitted on January 11, 2013, but Alison Levitt QC, principal legal adviser to the Director of Public Prosecutions (DPP), said today that no charges will be brought.
"Having carefully considered the matter, the CPS has concluded that there is insufficient evidence for a realistic prospect of conviction in relation to that journalist. The other journalist remains under investigation," she said in a statement.
"As eight people are awaiting trial in relation to this matter, it would not be appropriate to give reasons for this decision at this stage. At the conclusion of any related proceedings we will consider what more can be made public in relation to this decision."
Coulson, Brooks and six other former News of the World employees face a total of 19 charges relating to alleged phone hacking, and they will go to trial later in the year.