The arrest warrant issued yesterday for Julian Assange, the founder of Wikileaks was withdrawn just hours after it was issued.
The climbdown was confirmed in a brief statement posted on the website of the Swedish prosecution service.
"Chief prosecutor Eva Finne has come to the decision that Julian Assange is not suspected of rape," it said. Subsequent media enquiries were directed to the web site.
Assange had reacted to the charges claiming rape and molestation saying: "The charges are without basis and their issue at this moment is deeply disturbing."
The claim by Wikileaks that the charges were part of a smear campaign as WikiLeaks prepares for the publication of a further 15,000 confidential US military documents were lent more substance by the development.
Prosecutors maintained that while the warrant on rape charges had been withdrawn, investigations into separate allegations of molestation were continuing.