The court in Perugia also cleared five other people at the end of the three and a half year trial.

The BBC's Orla Guerin reports: "Andreotti's legal woes are not over yet"

Mr Andreotti, 80, was seven times Christian Democrat premier and remained highly influential until the early 1990s.

"I thank God," Mr Andreotti said in Rome, after his lawyers told him the verdict by telephone. "I was more than 99% certain."

Pecorelli was allegedly about to publish harmful material

The journalist, Mino Pecorelli of the gossip magazine Osservatorio Politico, was killed on 20 March 1979. He was struck down in Rome by four bullets, one in his mouth Mafia-style.

According to the prosecution he was assassinated by a Mafia hitman as a service to Mr Andreotti.

The former premier was alleged to have masterminded the killing to avoid Pecorelli publishing the diaries of slain Christian Democratic leader Aldo Moro.

The prosecution said the material could have devastated Mr Andreotti's political career.

Second Mafia trial

Former Foreign Trade Minister Claudio Vitalone, convicted Mafia bosses Gaetano Badalamenti and Pippo Calo, Mafia hitman Michelangelo La Barbera and common criminal Massimo Carminati were also cleared of involvement in Pecorelli's murder.

Pecorelli was gunned down in Rome

Prosecutors had asked for life imprisonment for all six defendants.

Mr Andreotti - who has consistently denied any connection with organised crime - is also involved in a second Mafia-related trial in Sicily which is due to end later this year.

The allegation is that he traded favours with the Mafia to gain votes for the Christian Democrat party.

Pope

The Vatican and politicians from across the board rushed to congratulate Mr Andreotti, now a senator for life, following the verdict.

Mr Andreotti is close to the Vatican

"It's clear that the Holy See learned of the news, [which was] certainly expected, with great satisfaction," Vatican spokesman Joaquin Navarro-Valls said.

Far right leader Gianfranco Fini added: ''The verdict spares Italy the shame of having been led for years by a man who ordered an assassination.''

Opposition leader Silvio Berlusconi, who has been convicted on corruption charges, exclaimed: "Hallelujah! I have always thought it was ridiculous ... that a man as intelligent and brilliant as Giulio Andreotti could risk a life and a career like his with such nonsensical and absurd behaviour.''

The prosecution is expected to appeal against the verdict. "I still have faith in the justice system but there has been so much outside protection," Pecorelli's sister Rosita said.