The United Kingdom has withdrawn a threat to enter Ecuador's embassy in London to arrest WikiLeaks founder Julian Assange who has taken refuge there, the Ecuadorian president has said.
Rafael Correa was speaking during a weekly media address on Saturday.
"We consider this unfortunate incident over, after a grave diplomatic error by the British in which they said they would enter our embassy," Correa said.
In a statement, Ecuador's government said it had received "a communication from the British Foreign Office which said that there was no threat to enter the embassy".
Ecuador was furious after the British government warned it might try to seize Assange, who has been holed up in the building for more than two months trying to avoid extradition to Sweden, where he is wanted for questioning over rape and sexual assault allegations.
Ecuador, which has granted Assange asylum, demanded that Britain's threat be retracted.
The latest move should improve relations between Quito and London and allow more talks on Assange's fate to take place.
For now, however, Assange remains trapped in the embassy with British police waiting outside. Britain has said it is determined to fulfill a legal obligation to send him to Sweden.
The Organisation of American States (OAS), a Washington-based group, had earlier condemned the UK's threat, and South American foreign ministers strongly backed Correa's position that the UK's warning was unacceptable.
Correa says he shares Assange's fears that if handed over to Sweden, he could then be extradited to the United States to face charges over WikiLeaks' 2010 publication of secret US diplomatic cables.
US and European government sources say the United States has issued no criminal charges against the WikiLeaks founder and has launched no attempt to extradite him.
Ecuador's government says it never intended to prevent Assange from facing justice in Sweden. It has said that if he received written guarantees from Britain and Sweden that he would not be extradited to any third country then Assange would hand himself over to the Swedish authorities.
During a press conference from the embassy's balcony last weekend, Assange denounced what he termed a "witch hunt" by the United States against him and WikiLeaks.