Mr Djindjic, the leader of the Democratic Party and one of the most outspoken opponents of President Milosevic, could have faced a long jail term if convicted.

His party said the charges were dropped because the prosecution produced insufficient evidence to prove that Mr Djindjic had fled Serbia in order to avoid serving in the armed forces during the conflict with Nato.

The military court hearing was closed to the public

There has been no comment from the government or the military.

At the time of his call-up, Mr Djindjic - who is also leader of the opposition group Alliance For Change - was in Montenegro, Serbia's smaller partner in the Yugoslav federation.

In a statement, the Democratic Party welcomed the court decision, saying "the army cannot be the subject of manipulation as long as most of its institutions are devoted to professionalism and not to party affiliation.

At the start of the case correspondents said the outcome could signal how far Yugoslav President Slobodan Milosevic was willing to go in suppressing his opponents.

Draft dodging is a serious crime in Serbia. Because the republic was in a state of war during the Nato airstrikes, Mr Djindjic could have faced a jail term of up to 20 years.

While his draft dodging charges have been dropped, the Yugoslav newsagency Beta reports that Mr Djindjic will be investigated for failure to report his change of address while he was in Montenegro.