The BBC will not appeal against Cliff Richard’s landmark privacy victory, leaving the corporation facing a bill for millions of pounds following the conclusion of a four-year legal battle.

The singer is clear to claim substantial damages as a result of the BBC’s decision to report in 2014 that the singer was being investigated by police regarding historical child sexual assault claims.

No charges were ever brought and Richard successfully sued, arguing that the decision to report on the case and use a helicopter to film a police raid on his house was an unjustified invasion of his privacy.

The ruling appeared to set a precedent that would restrict the ability of the media to factually report that an individual is under investigation by the police before any charges have been brought, raising concerns about press freedom.

Quick Guide Key figures in Cliff Richard v BBC Show Cliff Richard The singer was on holiday in Portugal when he learned that he was the subject of a police investigation regarding an allegation of historical sexual abuse – and the BBC had already filmed a raid on his Berkshire home. He said the publicity surrounding the case, which never resulted in charges, cost him a book deal and concert revenue, and took the decision to fight the broadcaster on privacy grounds. The case left him with a £4m bill, some of which he will be covered by costs and damages from the BBC and South Yorkshire police. Mr Justice Mann The high court judge who heard Richard's case was damning of the BBC’s actions. During the trial and in his judgment he often seemed surprised by the way journalists operated, and grappled with whether it was dishonest for a journalist to imply to a police force that they knew more information than they did. He refused permission to appeal against his own judgment and the BBC concluded this ruling had been written in such a way that it had little chance of winning at the court of appeal. He has previously seen the worst side of the media, having awarded payouts to victims in phone-hacking cases. Fran Unsworth The experienced BBC news executive was on duty when the decision was made to launch the story and use the helicopter footage. She discussed the story with other BBC news editors before making the decision to name Richard. In a statement to court she said she was aware the story would damage him but believed there was a clear public interest in running it. In January she was promoted to BBC director of news and current affairs. Tony Hall The BBC director general took the final decision that the corporation would not appeal. He is now responsible for leading a politicised campaign to convince the government to change the law so that journalists know they have the right to name suspects before criminal charges are brought. A former director of news, he led the Royal Opera House for more than a decade before rejoining the BBC in 2012. Hall was not around to face the media on the day it was announced the BBC would not appeal, but he will already be embarrassed that the attorney general's office insisted he sent his formal letter requesting a review of the law to the wrong department. Photograph: Victoria Jones/PA

The BBC’s costs for legal fees and damages are already thought to have reached about £1.9m, with the final bill expected to rise further.

Following legal advice the corporation has decided it does not stand a realistic chance of overturning last month’s judgment and that any appeal “would inevitably mean an expensive legal cul de sac and one that would simply prolong Sir Cliff’s distress”.

“The BBC is already on record in saying that we are sorry for the distress that Sir Cliff has been through,” said a spokesperson. “We say so again today. We fully appreciate the impact this has had on him. There are lessons for the BBC in how we reported this story and we will think very carefully about our approach in the future – both in tone and style. We recognise there are things we got wrong – even if all the facts we reported were right.”

Despite declining to appeal, the BBC’s director general, Tony Hall, has decided to launch a fightback by writing to the government and asking it to consider new legislation that would protect the right to report criminal investigations.

“We accept the BBC and the rest of the media have a duty to be sensitive to the rights and position of those who are under investigation, and in some cases there will be little public interest in naming individuals,” said the spokesperson. “However, this ruling will limit the longstanding ability of journalists to report on police investigations – many cases of which have resulted in further complainants coming forward. It will make it harder to scrutinise the conduct of the police and it will undermine the principle of the public’s right to know.”

The BBC’s legal advisers concluded that, even if an appeal court found the judge had made an error of law by failing to uphold the media’s right to name an individual, it would still conclude that the BBC breached Richard’s privacy in this specific case because of “the tone and techniques of the reporting”.

The BBC sent the letter to the attorney General, although the attorney general’s spokesperson insisted they had told the BBC in advance that this was not an issue for them to deal with.

The BBC also said the judgment was written in a way that would make it impossible to separate the broader journalistic principle from the specific issues surrounding the corporation’s approach.

The judge in the case, Mr Justice Mann, who has already blocked one request for an appeal, has said his ruling does not impose a blanket ban on the reporting of the subject of a criminal investigation.

Instead, he said an individual under investigation starts with a reasonable expectation of privacy “that can give way to countervailing factors” such as the safety of the public or the desire to flush out potential witnesses or victims.

The Richard case proved to be embarrassing for the BBC and senior executives, who were forced to recount and justify the process involved in deciding to run the story, which came at the end of a series of sexual abuse cases involving entertainment stars after the Jimmy Savile scandal.

The decision not to seek an appeal has potential repercussions for internal BBC politics. A further defeat could have enshrined the ruling in law and increased the BBC’s costs, while putting further pressure on the executives involved in the story.

They include Fran Unsworth, the current BBC director of news and current affairs, who ultimately signed off the decision to use the footage in 2014. Following the initial verdict she said there were some things that could have been “done differently” but it marked a “significant shift” against press freedom. However, the BBC is sticking by its staff and no departures are expected.

Richard, who said the case took a serious toll on his health, claims to have spent more than £4m fighting it and says he expects to be out of pocket even after accepting damages from the BBC and South Yorkshire police, which reached an earlier settlement.

A spokesman for Richard welcomed the decision: “Sir Cliff reluctantly took his case to court because he felt his privacy had been flagrantly invaded and disappointingly the BBC were not prepared to acknowledge that and apologise.”