Sri Lanka's state prosecutor on Wednesday withdrew charges against a stand-up comedian for a joke which police said insulted the country's Buddhist majority.

Natasha Edirisooriya, who had been jailed for more than a month before securing bail, said she felt vindicated after the Colombo Fort magistrate cleared her of blasphemy.

"I am greatly relieved that this ordeal is over," 33-year-old Edirisooriya told AFP, soon after the case was dismissed.

Her producer, Bruno Divakara, was also cleared.

The prosecution was seen by rights activists as emblematic of Colombo's use of blasphemy laws -- and Sri Lanka's controversial International Covenant on Civil and Political Rights (ICCPR) -- to stifle individual freedoms.

Edirisooriya was arrested in April 2023 and imprisoned for 39 days after police said they were charging her under the ICCPR Act, which prohibits magistrates from granting bail to suspects.

However, she appealed and secured bail in July last year.

But the case dragged until Wednesday, when the state attorney-general said they decided not to proceed.

"This whole prosecution is a joke," Edirisooriya said. "It is a great use of taxpayers' money!"

"Be careful with what you write," she told AFP. "I don't want to get arrested again."

During a show in Colombo, Edirisooriya had joked about peer pressure that parents face today, and suggested that it may have been greater during the time of the Buddha.

The reference to the Buddha, though seemingly inoffensive, had angered some Buddhist monks who complained against her skit which had been shared on social media.

Several international rights organisations and foreign embassies had closely followed her case as an assault on free speech.

The Washington-based Freedom House watchdog said Edirisooriya's case highlighted emerging risks.

"In recent years, the Sri Lankan government has exploited existing laws to target freedoms of expression, speech, and assembly," the rights group said in its latest report.

"The ICCPR Act was passed under the pretext of protecting minorities from hate speech, but has largely been used to target those at the margins of society."