Sweden’s navy has cancelled its week-long operation in the archipelago off Stockholm after finding no trace of the Russian submarine widely anticipated by military specialists and the media.

“Our assessment is that in the inner archipelago there was a plausible foreign underwater operation,” Rear Adm Anders Grenstad said. “But we believe that what has violated Swedish waters has left.”

Whatever was there could not have been a conventional submarine, Grenstad said, but a “craft of a lesser type”. It was not possible to state how big it was or to what country it belonged, he added. “The operation is substantially complete. The vessels and amphibious units have gone to port and resumed normal preparedness,” he said.

The hunt began last Friday after a member of the public contacted the armed forces with substantial and credible information, he said. The public reported 250 sightings during the ensuing week, with the navy taking five of them seriously.

Some reports given prominence in the media turned out to have innocent explanations, such as the “man in black” allegedly hunted by special intelligence who was revealed to be a pensioner fishing for sea trout. There was also a media focus on possible Russian “mother ships” in the Baltic that were linked to the Russian president, Vladimir Putin.

For seven days, Sweden’s navy criss-crossed a vast expanse of water dotted with 30,000 islands, in what specialists likened to a search for a needle in a haystack.

Critics complained of a media circus surrounding the hunt, as several newspapers hired helicopters to follow the navy, whose specialist submarine-hunting helicopters were sold off in 2008. “In comparison with the newspapers’ reporting, Star Wars seems to be a social-realist documentary,” columnist Peter Kadhammar wrote in Aftonbladet, a popular tabloid.

Russia’s defence ministry consistently denied that one of its vessels was in Swedish waters, and dismissed the operation as a “tragicomedy”.

The fevered atmosphere of the past week recalled the cold war fears that gripped the country after a Russian nuclear-armed submarine became grounded on rocks in southern Sweden in 1981. For more than a decade, the navy conducted frequent searches of Swedish waters, sometimes dropping depth charges on suspect objects. But no Russian submarine was identified.

This week’s naval operation cost about SEK20m (£1.7m), or about the same sum that was spent on fighting forest fires in Sweden over the summer, Grenstad said.

Sweden elected a minority “red-green” government in September, which has faced pressure on defence spending after Russian incursions into the country’s airspace and heightened fears about Sweden’s defence capabilities in the worst crisis in east-west relations for a generation.

Before the submarine hunt, the government had agreed to implement the recommendations of a cross-party parliamentary committee to increase defence spending and proceed with the SEK900m purchase of 10 fighter aircraft and a submarine.

Announcing its first budget on Thursday, the government confirmed the additional SEK300m each year for the next five years, but the centre-right opposition claimed it amounted to a cut in real terms.

A conspiracy theory that the submarine scare was manufactured to strengthen the navy’s case for greater finance was widely discussed on social media. “The timing is almost too good to be true,” according to Aftonbladet.

Maj Gen Igor Konashenkov, official spokesperson for Russia’s ministry of defence, told Russian reporters on Friday that Sweden’s submarine hunt threatened the future free movement of shipping in the Baltic.

“Such uncorroborated actions by the Swedish armed forces, inflamed by rhetoric in the spirit of the cold war, lead only to an escalation of tension in the region. Their consequence is likely to be not a strengthening of security in the country, but an undermining of the basis of maritime economic activity in the waters of the Baltic sea.”

He said Sweden had adopted Napoleon’s principle to “get stuck in and then we’ll see” without thinking about where it would end, opting to drag out the “fiasco” for as long as possible.