The Food Standards Agency has dropped plans to prosecute Selfridges for selling raw milk from a vending machine at its London store.

In January, the regulator announced plans to prosecute the retailer and the farmer who supplied the milk – Stephen Hook – for breaching food hygiene rules. The vending machine was installed in 2011.

The FSA said this week: “Proceedings have been discontinued against Selfridges after the FSA received assurances from them that, pending the outcome of a detailed FSA review, raw cows’ drinking milk would no longer be placed on sale in its premises. The case against Mr Hook is proceeding separately, we cannot discuss any further details at this stage.”

Hook is due to appear at Westminster Magistrates’ Court on 24 April. According to a newsletter on the Hook & Son website, the farmer is considering an offer from the FSA to drop the charges against him.

“Selfridges is pleased that the FSA has decided not to proceed with the prosecution against us. We note that the FSA is currently undertaking a review of the current controls governing the sale and marketing of raw drinking milk and we look forward to the publication of their report with interest,” the retailer said.

Jim Begg, director general of industry body Dairy UK, broadly welcomed the FSA’s decision. “The decision seems to be a sensible and proportionate way of handling a sensitive subject.”

However, he warned that current legislation is unclear and had been overtaken by activities such as online selling: “We trust the FSA review will clarify all the grey areas and we look forward to it.”

The FSA announced a review into the legislation around raw milk in March 2012. It is aiming to publish its consultation in May, after which there will be a 12-week public consultation period, before the FSA presents its advice to its board later this year.

Supporters of unpasteurised milk say it has health benefits. However, its sale is carefully controlled because germs normally killed by pasteurisation may be present in raw milk. At present, its sale is limited to the farmgate and some farmers’ markets in England and Wales. Its sale is completely banned in Scotland.

Raw milk is sold in vending machines in other European countries, including Germany, Italy and Poland.