Hannah Thomas was charged with hindering or resisting police and two counts of refusing to comply with a move-on direction after police sought to break up a footpath protest outside a southwestern Sydney business on June 27.
Since her arrest, she has suffered a serious eye injury that required surgery after a policeman allegedly punched her.
As all three charges against the activist were withdrawn and dismissed at Bankstown Local Court on Tuesday, her lawyers revealed they would file civil proceedings in the Supreme Court for "malicious prosecution" and assault and battery by police.
Ms Thomas appeared in court wearing sunglasses that tinted out her injured right eye.
"The charges against me ... should never have been brought, so it's a relief that they've finally been dropped," the 35-year-old told reporters outside court.
"But it's far from justice."
NSW Police charged her two days after the protest, but months on, "the male police officer who punched me in the head with enough force to rip open my right eyeball has not been charged," Ms Thomas said.
"If he was willing to punch me in the face in front of so many witnesses and people filming, I shudder to think what he is doing when no one's watching."
Her lawyer expects the police officer in question will be charged and said other officers should "certainly be disciplined".
Peter O'Brien confirmed her legal team would seek costs for the prosecution and compensation for Ms Thomas.
"The eye is still affected and the outcome of that is still unknown - but it's a very, very serious injury," he told reporters.
Ms Thomas was among five people arrested as they rallied outside SEC Plating, an Australian firm reportedly linked to the manufacture of components for US fighter jets used by the Israeli Defence Forces, which the company has denied.
The other four - Zachary Schofield, 26, Shane Reside, 41, Brandon Eid, 24, and Holly Zhang, 29 - all pleaded not guilty in July to various charges relating to the protest and their arrests.
Those cases remain ongoing, but Ms Thomas believes they deserve justice as well.
"It's absurd for the police to be maintaining charges against Zach Schofield and dropping them against me when the circumstances of our arrest are so similar," she said.
Police said charges against a 26-year-old had also been withdrawn on Tuesday, but court records indicated Schofield's case was still active, with a further mention for service of the evidence brief due on September 19.
The arrests are subject to an internal NSW Police review, with external oversight by the police watchdog.
NSW Police Assistant Commissioner Brett McFadden previously said he didn't observe any misconduct in officers' body-worn camera footage of the incident.
NSW Greens justice spokeswoman Sue Higginson lauded the decision to drop Ms Thomas' charges.
"The withdrawal of these charges ... is a clear admission that Hannah should never have been targeted in the first place and now leaves many questions open about the entire police response," she said.
Ms Thomas had challenged Prime Minister Anthony Albanese for his inner-western Sydney seat of Grayndler at the federal election in May.
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