It was reported in a Guardian article recently that the CPS authorised the undercover operations by PC Kennedy. Depending on exactly what they authorised, it might be that they acted unlawfully in saying to the police that they could go ahead and commit criminal acts of conspiracy and incitement, etc with immunity from prosecution. I don't believe the CPS have the authority to say this to anyone, so if it can be confirmed that they did this, it might be worth considering a judicial review.

The CPS basically do this anyway, when they find some excuse and say it's "not in the public interest" or "insufficient evidence to prosecute" when it comes to the police, but that's somewhat different, because that's after the fact and so harder to challenge.

Apparently the head of the CPS, Keir Starmer, has just told the Justice Committee that "decisions on undercover policing do not involve the CPS"  http://twitter.com/afuahirsch/status/27327357454913537 I'm not sure that rules out that they promised immunity for the actions after the decision about what to do had been made by the police though.

I was also interested to read that, according to Bob Quick, who as an assistant commissioner was the former head of special operations at the Metropolitan police, a senior officer can authorise an undercover officer to participate in criminal acts: "If they are not involved in the planning, or did not instigate or initiate an offence, if their role is of a peripheral nature, they can be granted participating status."
 http://www.guardian.co.uk/uk/2011/jan/10/fine-line-undercover-officer

I wasn't aware that there was any law that gave police officers the power to allow other police officers to commit crime, so it would be interesting if someone could find out exactly which statute allows this.