President Lee Myung-bak's son has been cleared of alleged irregularities in a now-scrapped project to build Lee's retirement home on the southern outskirts of Seoul, prosecutors said Sunday.

Lee Si-hyung, the president's 34-year-old son, and six others were accused of playing a role in buying land for the retirement home under the son's name and using about 1 billion won ($851,800) in taxpayer money.

The project drew public criticism last year following revelations the younger Lee and the presidential office jointly purchased the planned site in Seoul's Naegok-dong for a total of 5.4 billion won.

Opposition parties, including the main opposition Democratic United Party, filed a complaint with prosecutors in October, accusing the seven people of bringing losses to the country.

The Seoul Central District Prosecutors' Office said it has dropped all charges as there was no evidence of malpractice in dividing the cost of the plot between the president's son and the presidential office.

Prosecutors also said they found no evidence the president tried to buy land illegally under the name of his son, who purchased the plot with his own means.

Presidential spokesman Park Jeong-ha said in a press briefing that the presidential office "respects the results of the prosecution investigation" and is "sorry for causing concern to the people."

The presidential office said last year the son's name was used because of security reasons as a contract bearing the president's name would lead to the site's disclosure.

President Lee has said he will return to his old house in Nonhyun-dong in southern Seoul after leaving office early next year.(Yonhap)