Thai prosecutors dropped royal defamation charges on Thursday against an American scholar accused of insulting the monarchy over an article published on a political website.

Paul Chambers -- a longtime Southeast Asia politics scholar in Thailand -- was arrested last month in Phitsanulok province, north of Bangkok, under the kingdom's strict lese-majeste laws.

The case marked a rare instance of a foreign national being charged under Thailand's lese-majeste law, which bans criticism of King Maha Vajiralongkorn and his close family and carries sentences of up to 15 years in jail per offence.

The Office of the Attorney-General said on Thursday it had decided "not to indict" Chambers.

"The director-general had decided not to indict the suspect," the statement said, adding that prosecutors would seek to dismiss the case in court and coordinate with police.

The Thai army, a staunch defender of the monarchy, filed the complaint over a short blurb posted on a political think tank website this year.

A military spokesperson last week defended the decision to file the case following criticism that the army had no legal standing to do so under the Thai law.

Trade talks between Thailand and the United States have been indefinitely postponed, fuelling speculation that the arrest may have strained diplomatic ties between the two countries.

International watchdogs have expressed concern over the use of the lese-majeste laws -- known as Article 112 -- against academics, activists and even students.

One man in northern Thailand was jailed for at least 50 years for lese-majeste last year, while a woman was given a 43-year prison sentence in 2021.

In 2023, a man was jailed for two years for selling satirical calendars featuring rubber ducks that a court said defamed the king. (AFP)