Lord Steel cleared by Lib Dems over child abuse remarks
The former Liberal leader had been suspended after comments made regarding MP Sir Cyril Smith.
A party investigation has determined there are "no grounds for action" against Lord Steel.
The former Liberal leader had been suspended by the Liberal Democrats following comments he made to an inquiry regarding child abuse allegations against former MP Sir Cyril Smith.
Scottish Lib Dems leader Willie Rennie said that the party executive had "determined, after careful consideration, that there are no grounds for action against David Steel".
Lord Steel said: "I am naturally pleased and relieved the executive of the Scottish Liberal Democrats has completed their investigation and, after fully considering my responses to questions at IICSA, has lifted my suspension from the party and cleared my name."
Lord Steel gave evidence to the Independent Inquiry into Child Sexual Abuse in March this year - telling the probe a conversation with Smith left him "assuming" the allegations were correct, but that the party did not investigate them.
Today Mr Rennie said that Lord Steel had provided clarifications which "state clearly that Cyril Smith did not confess to any criminality which is why he took no further action at the time"
'Opinions and assumptions are not facts, and those expressed in some quarters have caused me great personal distress.'Lord Steel
He added: "David Steel's national and international reputation is beyond doubt and this has been a difficult matter for us to consider but it is important for everyone to understand that the Liberal Democrats will always investigate such serious matters."
Lord Steel said: "I believe in the highest standards of safeguarding for young and vulnerable people. As such, I voluntarily attended the IICSA hearing and offered open and honest answers, some of which have been erroneously reported and taken out of context.
"These inaccurate elements led some to question my own such commitment. Opinions and assumptions are not facts, and those expressed in some quarters have caused me great personal distress.
"Throughout my career, I have always acted to uphold the highest standards. I look forward to contributing to the party's cause and focusing on the shared commitment we have had for many years, which is to lead to improve the life opportunities of all young people, especially those who have had the toughest start."
Lawyer Richard Scorer, who represents some of those alleging abuse by Smith, said the party's decision was "disappointing".
Mr Scorer, of law firm Slater and Gordon, also claimed it was "premature" of the Liberal Democrats to conclude their investigation without waiting for the findings of the abuse inquiry.
He said: "Lord Steel's evidence and the dismissive way in which he delivered it was truly shocking. The least my clients are owed is for the matter to be investigated in a thorough, open and transparent way rather than behind closed doors."