Disgraced Glitter will not be charged with child rape
But Glitter could still be jailed for up to seven years after he was charged with committing obscene acts with two girls aged 10 and 11.
The 61-year-old, real name Paul Gadd, was arrested as he tried to flee the country in November amid allegations over relationships with two girls.
The girls reportedly told police they had sex with the former glam rocker at his rented seaside home in Vung Tau.
But police investigators said there was not enough evidence to press a child rape charge which carries a maximum penalty of death by firing squad.
Medical tests have shown the girls did not have sexual intercourse.
Last month it emerged that Glitter had paid 1,600 each to the families of the girls, equivalent to around three times the average annual wage in Vietnam.
Both families wrote letters to court asking for the case against the star to be dropped and Glitter's lawyer hoped it would mean a lighter sentence.
Glitter left his home in the southern resort of Vung Tau after he was tracked down there by a Sunday newspaper.
He was held by authorities at Tan Son Nhat International Airport in Ho Chi Minh City as he tried to leave the country.
The former star was then taken back to Vung Tau for questioning and was held in a regional prison.
Glitter was convicted in Britain in 1999 of possessing child pornography.
He served half of a four-month jail sentence and later went to Cambodia, which permanently expelled him in 2002.
Glitter is accused of kissing and fondling the girls and engaging in other physical acts, said Nguyen Van Xung, deputy chief prosecutor in southern Ba Ria Vung Tau province.
Prosecutors will hand their case to Ba Ria Vung Tau provincial People's Court early next week, which will decide within two-and-a-half months whether to put Glitter on trial, he added.
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