The head of the International Monetary Fund made a "serious error of judgment" in having an affair with a colleague but did not abuse his authority during the episode, the governing board has concluded.

Following an investigation by an outside legal firm and an all-day meeting at the weekend, the fund's 24-member executive board, which represents its shareholder countries, said Dominique Strauss-Kahn had shown "no harassment, favouritism or any other abuse of authority" and was free to continue in his post.