Republican vice-presidential candidate Sarah Palin yesterday shrugged off the findings of a state inquiry into the 'Troopergate' affair, which concluded that she had used her position as governor to pursue a private feud with a State Trooper.

Speaking at a campaign rally in Pennsylvania, she remained defiant, insisting the inquiry outcome proved she had not broken the law. Shrugging her shoulders while addressing her audience, she said: 'If you read the report, you will see there was nothing unlawful... or unethical about replacing a cabinet member.'

Her solicitor, Thomas Van Flein, said there was no evidence she had breached any ethical code. 'In order to violate the ethics law, there has to be some personal gain, usually financial. [The report] has failed to identify any financial gain.'

However, an already tense US presidential election campaign was electrified by the publication of the damning verdict, delivered by Stephen Branchflower, a retired prosecutor who was appointed as investigator last July by a Republican-dominated committee of the Alaska state legislature. Branchflower found that Palin had breached the Alaska Executive Branch Ethics Act, which states that 'each public officer holds office as a public trust and any effort to benefit a personal or financial interest through official action is a violation of that trust'.

He also concluded that Palin's feud with her former brother-in-law, Mike Wooten, a State Trooper, or officer, in the Alaskan state police, was 'likely a contributory factor' in her decision to dismiss the head of that force, Walt Monegan. His report detailed the way in which Palin and the people around her repeatedly pressurised Monegan over Wooten. However, Branchflower concluded that Monegan's dismissal had been carried out in a 'proper and lawful' fashion. Under Alaskan law, it is for the state's personnel board, which is conducting its own inquiry, to decide whether Palin violated state law and, if so, must refer it to the senate president for disciplinary action. Violations can carry a possible $5,000 fine.

Meg Stapleton, a spokeswoman for the Republican Presidential candidate John McCain, said the legislative council was 'making a tortured argument to find fault without basis in law or fact'. A campaign statement said: 'This report also illustrates what we've known all along: this was a partisan-led inquiry run by [Barack] Obama supporters and the Palins were completely justified in their concern regarding Trooper Wooten given his violent and rogue behaviour.'

The report could not have come at a less opportune time for the McCain campaign. According to the latest Gallup poll, published on Friday, he is trailing Barack Obama by 10 points, with 41 per cent to the Democrat's 51 per cent.

Palin gave the McCain campaign an extraordinary boost after she first burst on to the American national scene at the Republican convention last month. Since then she has done little for his chances of success, with the polls suggesting many voters doubt she has the experience or ability for high office. Publication of the report is likely to fuel claims that McCain showed poor judgment, or even recklessness, in selecting her.

Palin had agreed to co-operate with the inquiry, but when McCain selected her the following month she changed her mind, claiming the inquiry had been hijacked by Democrats. Palin has given a number of reasons for her decision to sack Monegan, but always denied wrongdoing. Shortly before the report was published, her husband Todd attempted to draw some of the investigation's fire by admitting that he had repeatedly complained about Wooten, believing him to be a danger to the public.

In 2005, Wooten had been through an acrimonious divorce and custody battle with Palin's younger sister, Molly McCann. A number of complaints that the Palin family made about him at that time were upheld - including a charge that he had shot his own stepson with a Taser stun-gun on a low setting. In March 2006 he was disciplined, suspended for five days and given a final written warning, but allowed to keep his job.

Palin came into office as governor of Alaska nine months later, and appointed Monegan as her public safety commissioner. Monegan says he immediately came under pressure to sack Wooten. He told Branchflower he was summoned to see Todd Palin, who complained that Wooten's punishment had been merely a 'slap on the wrist'. Monegan said: 'I had this kind of ominous feeling that I may not be long for this job if I didn't somehow respond accordingly.'

A further finding of Branchflower's 263-page report was that the office of the Alaska state attorney-general, Talis Colberg, failed to comply with his request to release information about the case held in various emails. Some of these emails may now surface as a result of Friday's court case, shedding more light not only on Troopergate but also on the conduct of the politician who would, as American commentators repeatedly remind the voters, be just a heartbeat from the presidency were McCain elected.

Palin is now known to have used at least two personal email accounts to conduct official business: gov.palin@yahoo.com and gov.sarah@yahoo.com. Both have now been shut down. The judge ordered the Alaskan attorney general to contact Yahoo and other private carriers to preserve any emails sent and received on those accounts. If the emails were ditched when the accounts were deactivated, he directed state officials to have the companies try to retrieve them.

Freedom of information campaigner Andrée McLeod, who brought the case, said: 'We shouldn't be in a position where public records have been lost because the governor didn't do what every other state employee knows to do, which is to use an official, secure state email account to conduct state business.'