An investigation by the audit office said that the minister had used the limousine in accordance with the relevant regulations.

"Our conclusion is: no damage has been done to the federal budget," said a spokesman for the office, and added that Schmidt had correctly declared her use of the car on her tax return.

The story first came to light when her limousine was reported stolen in the Spanish town of Alicante.

Opposition politicians were outraged that she would drive her car some 2,500 kilometers to Spain, calling it a waste of taxpayers' money.

When the situation first came to light, the center-left Social Democrats (SPD) dropped her from the party's shadow cabinet fearing she would be a liability for the upcoming elections at the end of September.

However, a statement released by Foreign Minister Frank-Walter Steinmeier said that since the definition of the audit office was clear and definite, he was re-instating her as part of his team.

The SPD party has experienced a drop in opinion poll ratings in recent weeks after the affair came to light. Currently the party is trailing far behind Chancellor Angela Merkel's Christian Democrats.

av/Reuters/dpa
Editor: Andreas Illmer