A Special Immigration Appeals Commission panel ruled that Ekaterina Zatuliveter, 26, was not using her special relationship with Liberal Democrat Mike Hancock to gather information for the Russian government, The Independent reported.
Zatuliveter met Hancock at a conference in 2006. She was arrested in 2010 on suspicion of espionage.
Tessa Gregory, Zatuliveter's lawyer, said intelligence agencies are supposed to be protecting Britain from "serious threats."
"It is therefore extremely worrying that they have chosen to waste their time, at great public expense, needlessly and unfairly pursuing an innocent young woman," she said. "Their case was built entirely on speculation, prejudice and conjecture. It was amateur and poorly researched."