The US government is to drop espionage charges against two officials of America's most powerful pro-Israel lobby group accused of spying for the Jewish state because court rulings had made the case unwinnable and the trial would disclose classified information.

The two accused, Steven Rosen and Keith Weissman, worked for the American Israel Public Affairs Committee (Aipac), which drives fundraising for some US members of Congress. They were accused of providing defence secrets to the chief political officer at the Israeli embassy in Washington, Naor Gilon, about US policy toward Iran and al-Qaida in league with a former Pentagon analyst who has since been jailed for 12 years.

Dana Boente, who was prosecuting the case in Virginia, said that the case was dropped because pre-trial court rulings had complicated the government's case by requiring a higher level of proof of intent to spy. The court said the prosecution would have to prove not only that the accused pair had passed classified information but that they intended to harm the US in doing so.

Rosen and Weissman have argued they were merely using the back-channel contacts with government officials, lobbyists and diplomats that are common in Washington. The defence intended to call the former US secretary of state, Condoleezza Rice, and other officials to establish that the government regularly uses Aipac to discreetly send information to Israel.

A former Pentagon analyst, Lawrence Franklin, has already pleaded guilty to disclosing classified information to Rosen and Weissman.

The dropping of the charges will come as a relief to Aipac because the case threatened to overshadow its annual conference this weekend at which it parades support from American politicians. It was also an embarrassment which laid the lobby group open to charges of putting Israel's interests above those of the US.

The case has been further complicated by a scandal revealed last month by a political publication, Congressional Quarterly, around a member of Congress, Jane Harman, who was secretly taped telling an Israeli agent that she would pressure the justice department to reduce spying charges against the two former Aipac officials.

In return, the Israeli agent offered to get a wealthy donor who helps funds election campaigns for Nancy Pelosi, the then-minority leader in the House of Representatives, to pressure Pelosi to appoint Harman to a senior position on the congressional intelligence committee.

Aware of the sensitivity of the position she has put herself in, Harman finished the discussion with the Israeli spy by saying: "This conversation doesn't exist."

Congressional Quarterly obtained a transcript of the tape recorded by the National Security Agency. An FBI probe of Harman was dropped after the intervention of President Bush's attorney general, Alberto Gonzales.

Aipac has long wielded considerable influence over US policy in the Middle East though a mix of appeals to American sympathy for Israel and a hard-ball approach against members of congress who question the unyielding policies of Israeli governments.