Police had found no evidence Mr Taylor was involved in falsifying documents, an Australian Federal Police spokesperson said.

"The AFP assessment of this matter identified there is no evidence to indicate the Minister for Energy and Emissions Reduction was involved in falsifying information," police said in a statement.

"The low level of harm and the apology made by the Minister for Energy and Emissions Reduction to the Lord Mayor of Sydney, along with the significant level of resources required to investigate were also factored into the decision not to pursue this matter."

Mr Taylor's office was accused of distributing falsified documents in an attempt to discredit mayor Clover Moore over climate change. He wrote to the mayor accusing her council of spending more than $15 million on travel in 2017-18, claiming the figures came from the council's annual report. In fact, the spending was less than $6000 and the annual report appeared to have been falsified.

Mr Taylor insisted his office had downloaded the report from the council's website, but the council showed the incorrect figures had never appeared in any version of its annual report.

Mr Taylor has apologised but never explained how he came to distribute a false document.

Labor referred it to the NSW Police last year; in December, the NSW Police referred it to the federal police.

Attorney-General Christian Porter went on the attack, accusing Labor of making "meritless political referrals" to police.

"The strike rate is now zero from 10," Mr Porter said of Labor's referrals.

On Thursday, the police confirmed the investigation has been dropped.

"Following inquiries undertaken and information provided by NSW Police, the AFP has determined it is unlikely further investigation will result in obtaining sufficient evidence to substantiate a Commonwealth offence.

"The AFP now considers this matter finalised."

Labor Leader Anthony Albanese said police had gone through the Sydney council's website data, and he questioned why Mr Taylor's office data hadn't also been probed.

"He's been involved in this document where we still don't know where it came from. We know it was given from his office to the Daily Telegraph. Where did it come from? They can't just say we don't know because quite clearly someone does know."

Labor spokesman for the Attorney-General's portfolio, Mark Dreyfus, said two police investigations had now failed to clarify where the "dodgy figures" came from.

The national Library's Trove database confirmed that the correct version of the report had been on the internet through 2019.

And the draft letter to the Sydney mayor prepared for Mr Taylor by the Department of Energy contained no reference to the council's travel spending, he said.

"If Angus Taylor continues to refuse to come clean, then the prime minister must order a proper, independent and transparent investigation into his minister," Mr Dreyfus said.

The affair dominated the final weeks of parliament in 2018 after Mr Taylor was also accused of telling a false story to Parliament in his inaugural speech. His claim to have bunked down the corridor from feminist author Naomi Wolf at Oxford University, whom he accused of political correctness over Christmas, sparked a brief storm when he refused to retract his story despite Ms Wolf saying she hadn't been at Oxford at the time.

Separately, Mr Taylor has faced questions over whether the government had attempted to intervene in a departmental investigation into the clearing of critically endangered grasslands at a property owned by his family.