WikiLeaks founder Julian Assange has hailed an "important victory" after Swedish prosecutors dropped a rape investigation against him.
The Australian gave a clenched fist salute as he made a rare public appearance on the balcony of Ecuador's embassy in London, where he has been holed up for nearly five years to avoid extradition to Sweden.
"Today is an important victory for me," he said.
Assange said his lawyers had contacted British authorities in the hope of starting a "dialogue" over his future, after the police said they would be "obliged" to execute an arrest warrant against him if he left the embassy.
WikiLeaks editor Julian Assange appears on the balcony of the Ecuadorian embassy in London after Swedish authorities dropped their rape investigation. (AAP)
Assange would be arrested for breaching bail conditions by failing to hand himself in for extradition to Sweden in 2012 and instead fleeing to the embassy where he obtained political asylum.
"The road is far from over. The war, the proper war, is just commencing," a pale-looking Assange said told a crowd of reporters and a handful of supporters brandishing placards assembled under the balcony.
He promised that WikiLeaks would continue its "fight" for government transparency and digital rights.
Assange also voiced bitterness about the Swedish allegations against him, which date back to 2010.
"In prison, under house arrest and almost five years here in this embassy without sunlight!" he said.
"Seven years without charge while my children grew up without me. That is not something I can forgive. It is not something I can forget," he said.
Earlier, Marianne Ny, Sweden's director of public prosecution, said in a statement the rape investigation was dropped because "there is no reason to believe that the decision to surrender him to Sweden can be executed in the foreseeable future."
"In view of the fact that all prospects of pursuing the investigation under present circumstances are exhausted, it appears that it is no longer proportionate to maintain the arrest of Julian Assange in his absence," she added.
'Abuse of procedure'
Assange's accuser called the prosecutors' decision a "scandal", her lawyer said.
"It is a scandal that a suspected rapist can escape justice and thereby avoid the courts," the lawyer, Elisabeth Fritz, told AFP in an email.
"My client is shocked and no decision to (end the case) can make her change that Assange exposed her to rape," she said.
The accusation against Assange dates from August 2010 when the alleged victim, who says she met him at a WikiLeaks conference in Stockholm a few days earlier, filed a complaint.
Police guard the Ecuadorian Embassy in London after news Swedish prosecutors have dropped allegations against WikiLeaks founder Julian Assange. (AAP)
She accused him of having sex with her -- as she slept -- without using a condom despite repeatedly having denied him unprotected sex.
The 45-year-old Australian has always denied the allegations, which he feared would lead to him being extradited to the US and facing trial over the leak of hundreds of thousands of secret American military and diplomatic documents.
In November, Swedish prosecutor Ingrid Isgren was present during Assange's questioning at the Ecuadorian embassy as she posed questions through an Ecuadorian prosecutor.
Swedish prosecutors received a translation of the interrogation four months later, but "all materials were translated into Spanish then into English then back into Spanish then into Swedish," Ny said, making it difficult for the investigation to move forward.
The statute of limitations on the rape allegation expires in August 2020, and prosecutors could reopen the case if Assange returns to Sweden before then.
"Julian Assange has been a victim of a huge abuse of procedure. We are very pleased and very moved, as this marks the end of his nightmare," another of his lawyers, Christophe Marchand, told AFP.
Assange's Swedish lawyer, Per Samuelsson, said his client plans to move to Ecuador because "it's the only nation where he is safe."
"This is a total victory for Julian Assange. He is now free to leave the embassy when he wants. We have won the Assange case. He is of course happy and relieved. He has been critical that it has lasted that long."
Long legal battle
WikiLeaks founder Julian Assange. (AAP)
The investigation has suffered from multiple procedural complications.
In a letter sent to the Swedish government on May 8, Ecuador condemned "the obvious lack of progress" in the investigation despite Assange's questioning at the embassy in November.
Swedish judges had also refused to take into account the opinion of the UN Working Group on Arbitrary Detention, which in February 2016 said Assange was effectively "arbitrarily detained" by Sweden and Britain and called for the arrest warrant to be annulled.
Assange's Swedish lawyer last month filed a new motion demanding that the warrant be lifted after US Attorney General Jeff Sessions said in April that arresting Assange would be "a priority".
"The US has a will to take action... this is why we ask for the arrest warrant to be cancelled so that Julian Assange can fly to Ecuador and enjoy his political asylum," he told AFP at the time.
But the British police have said they will arrest Assange if he tries to leave the embassy because he broke his conditions for bail -- a relatively minor offence under British law -- by failing to surrender on June 29, 2012 for extradition to Sweden.
Assange was arrested by Britain in December 2010 and released on bail while fighting the extradition order, a bid that finally failed in June 2012 when Britain's Supreme Court declined to reopen the appeal.
Shortly afterwards, he lodged his request for asylum in Ecuador and fled to the country's embassy in London.
Prime Minister Theresa May, speaking at a campaign event in Edinburgh, said any decision to take action against Assange would be an "operational matter for the police".
© Nine Digital Pty Ltd 2017