Jacqui Thompson was arrested in 2011 for filming a Carmarthenshire council meeting and sued Mark James for libel.
He counter-sued for posts made on her blog and received £25,000 in damages.
The Crown Prosecution Service (CPS) said Mrs Thompson had been charged with an harassment offence but a decision was taken to discontinue her case.
Mrs Thompson, of Llanwrda, said she was "relieved" at the news and had been worried about her impending court case, which was due to take place on Thursday.
A CPS spokesman said: "Following a review, prosecutors were no longer satisfied there was a realistic prospect of conviction due to insufficient evidence and therefore made the decision to discontinue the case."
Mrs Thompson became embroiled in the legal row after she was arrested in June 2011 for refusing to stop filming a council meeting for her blog, in which she was critical of the authority.
She sued Mr James the following November and he successfully counter-sued in a private lawsuit.
In 2016, the High Court found Mrs Thompson had run a campaign of "harassment, defamation and intimidation" against Mr James.
She was told to pay back £250 a month to him over the next 10 years to cover the damages.
Carmarthenshire council covered Mr James' legal costs, a decision the Wales Audit Office later found to be unlawful.
But the authority is pursuing Mrs Thompson for £190,393 in legal costs.
The council would not comment on the latest development in the case, which it said was a private matter for Mr James.
Mr James has been asked to comment.
A blogger who launched a "campaign of harassment" against a council chief executive has had the criminal case against her dropped.