Bernard Matthews has escaped prosecution for leaving bins of scraps uncovered at its Holton cutting plant.
The FSA had been looking at evidence the turkey producer breached rules on disposing of animal by-products after BBC news footage showed seagulls apparently feeding on the contents of bins left open.
But the FSA, investigating on behalf of Defra, said there was no evidence that the gulls pictured were feeding on turkey off-cuts.
It said in a statement: "We have carefully scrutinised the evidence in this case and concluded there is insufficient evidence to provide a realistic prospect of conviction."
The decision immediately came under fire in the House of Commons. Lib Dem shadow environment secretary Chris Huhne branded it "astonishing".
"The Defra-commissioned reports pointed clearly to breaches in the regulations, and there was TV footage of wild birds feeding off open waste bins at the plant containing poultry meat. When parliament returns, I will press ministers to give a much fuller explanation than that we have been given."
Miles Hubbard, the T&G union's regional industrial organiser who claimed to speak on behalf of Bernard Matthews workers throughout the bird flu crisis, welcomed the news.
"We feel relief, vindication and confidence," he said. "Relief the prosecution 'cloud' has been blown away and vindication as the T&G always maintained standards of biosecurity at Holton were sound.
"We believe consumer confidence should return and Easter turkeys should be Matthews turkeys."
The FSA's decision brings the investigation into the H5N1 outbreak at Holton almost to a close. Defra is expected to finalise its report on how the disease came to be in Suffolk in the first place after Easter.