A US judge has thrown out charges against an Indian diplomat whose New York arrest and strip-search sparked a bitter diplomatic row with Delhi.

Devyani Khobragade was arrested on December 12 outside her children's New York school, accused of defrauding her Indian housekeeper's visa application.

An outraged India claimed full diplomatic immunity on her behalf after Khobragade said she was subjected to a cavity search while in custody.

Employed at the Indian consulate in New York, she acquired in January the full diplomatic immunity granted to diplomats at the Indian mission to the UN.

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It was on grounds of immunity that she petitioned a US court on January 9 to drop the case.

US District Judge Shira Scheindlin dismissed the indictment on Wednesday on grounds that Khobragade was granted full diplomatic immunity on January 8.

"Even if Khobragade had no immunity at the time of her arrest and has none now, her acquisition of immunity during the pendency of proceedings mandates dismissal," Scheindlin wrote.

"Khobragade's conditions of bail are terminated, and her bond is exonerated... It is ordered that any open arrest warrants based on this indictment must be vacated."

Khobragade returned to India in January, leaving behind her two daughters and husband, a US citizen.

Khobragade told an Indian newspaper of her anguish at being separated from her seven- and four-year-old girls and their father, an academic.

US prosecutors, disputing her immunity, accused Khobragade of sometimes forcing her Indian maid to work 100-hour weeks, even when sick and often without a day off, for pay as little as $1.22 an hour. Khobragade has denied the charges.

The diplomatic row between the two countries, which had embraced each other as strategic partners, strained ties and fanned resentment on both sides.

Source: Agencies