UPDATED as of 11:49 AM/ET 8/21:  Swedish prosecutors have cancelled an arrest warrant issued for Julian Assange, the founder of controversial whistleblower website Wikileaks.

The warrant was issued following a sexual assault complaint against him.

But on Saturday night, as international media outlets were beginning to pick up the story, Eva Finne, Sweden's chief prosecutor, announced that Assange was no longer wanted.

"I don't think there is reason to suspect that he has committed rape," the chief prosecutor said, but declined to go into any more details.

Assange had denied the allegations, saying via Twitter that the charges were "without basis and their issue at this moment is deeply disturbing".

The prosecutor's office in Stockholm said an arrest warrant was issued for the 39-year-old Australian national late on Friday for suspicion of rape and molestation.

'Dirty tricks'

After Swedish tabloid Expressen, first published reports that the arrest warrant had been issued for Assange, Wikileaks responded on Twitter saying: "We were warned to expect 'dirty tricks.' Now we have the first one."

"No one here has been contacted by Swedish police. Needless to say this will prove hugely distracting."

Assange's organisation has caused much controversy recently with the release of 75,000 classified US military documents containing information surrounding the wars in Iraq and Afghanistan.

The US government rejected the release of the documents, saying the website had "blood on its hands" for naming people who had helped its military in opposition to groups such as the Taliban and al-Qaeda, and ordered Wikileaks to return the files.

Wikileaks, meanwhile, has said that it is plans to reveal more of the remaining 15,000 classified documents it holds, possibly this month or next month.

Al Jazeera's Paul Brennan, in London, said: "The two alleged victims in this are in their twenties.

"One is supposed to have happened last weekend in Stockholm and another last Tuesday in Sweden but in a separate town."

Assange was in Sweden last week partly to apply for a publishing certificate to maintain the advantages it receives from the country's whistle-blowing protection laws. Wikileaks also has many of its servers in Sweden.