A prosecutor told Bankstown Local Court on Tuesday that no further proceedings would be brought against Hannah Thomas, 35, and the three charges she faced were withdrawn and dismissed.

Thomas, a lawyer and former Greens candidate, had been charged with hindering or resisting police and two counts of refusing to comply with a move-on direction after an allegedly unauthorised pro-Palestine protest in Sydney's southwest on June 27. "The director has directed no further proceedings," the prosecution said in court.

Outside the court, Thomas said the charges "should never have been brought" and described the decision as a relief. Her lawyer, Peter O'Brien, told reporters Thomas is expected to seek legal costs for the proceedings. A civil suit flagged on her behalf would allege assault and battery, false imprisonment, malicious prosecution, misfeasance in public office and collateral abuse of process.

Thomas was one of five people arrested at the demonstration outside SEC Plating, an Australian firm that has been reported to have ties to manufacture of components for U.S. fighter jets used by the Israeli Defence Forces; the company has denied those links. The four others arrested — Zachary Schofield, 26; Shane Reside, 41; Brandon Eid, 24; and Holly Zhang, 29 — pleaded not guilty in July to various charges connected to the protest, and their cases remain ongoing.

During the June arrest Thomas suffered a severe injury to her right eye that required surgery. Photographs circulated in June showed her with the right eye swollen, bloody and closed, and the right side of her face covered in blood while she sat in the back of an ambulance. Speaking from hospital at the time, Thomas said she had been participating in a peaceful protest and warned she could be left permanently without vision in her right eye.

New South Wales Police have opened an internal review into the arrests, and the matter is subject to external oversight by the state’s police watchdog. NSW Police Assistant Commissioner Brett McFadden has said he did not observe any misconduct in the officers' body-worn camera footage of the incident. A police spokesperson previously said Thomas "sustained facial injuries while being arrested for allegedly failing to comply with a police direction and the arrest was discontinued and [she] was taken to Bankstown hospital for treatment."

Thomas challenged Prime Minister Anthony Albanese for the seat of Grayndler at the last federal election and has been active in anti-Israel demonstrations. She has called on Australia to impose sanctions on Israel and accused the Israeli government of genocide in past statements. She was among demonstrators who protested at Albanese's electorate office following the seizure of Swedish activist Greta Thunberg's "Freedom Flotilla" by Israeli forces earlier this month.

The withdrawal of charges against Thomas removes the criminal case against her, but the police review and the potential civil litigation mean the matter is not yet concluded. The four other defendants arrested at the same protest continue to face court proceedings.