The Director of Public Prosecutions has dropped a case against former Guantanamo Bay inmate David Hicks.

The DPP had argued the profits of his memoir, titled Guantanamo: My Journey, were the proceeds of crime.

A case was lodged after a brief was prepared by Federal Police and a family trust into which book sales were being paid was frozen.

This morning, lawyers for the DPP told the Supreme Court in Sydney the case had been dropped but did not say why.

Hicks's book was released last year and covers everything from his life in Adelaide to his training with fundamentalist Islamic armed forces.

It also details his years in Guantanamo Bay in Cuba and his conviction for supporting terrorism.

After being captured in Afghanistan and being held in Guantanamo Bay in 2001, the 35-year-old pleaded guilty to providing material support for terrorism.

He was sentenced to seven years' jail, all but nine months of which were suspended, and was transferred from Guantanamo to an Australian prison in 2007 to serve out his term, subject to a 12-month gag order.

His supporters and lawyers have always argued he was tried by a "kangaroo court" at Guantanamo.

His book is thought to have sold about 30,000 copies.

Outside court today, Hicks said the DPP's decision brought him some closure and helped clear his name.

He said he was pleased the authorities seemed to have concluded that his conviction at Guantanamo was "unfair" and "obtained through duress".

"If there was any evidence, if any crime had been committed, we would have been able to proceed at court... but they've pulled the pin," he said.

"I feel like this acknowledges Guantanamo Bay and everything is illegal."

New evidence

In a statement, the DPP said the decision to drop the case had been made after new evidence came to light.

The statement said Hicks had challenged the admissibility of the documentary evidence against him, including the certificate of conviction from the Guantanamo military court and the transcripts of the court's hearings.

"The challenge also relied upon the fact that Mr Hicks entered what is known in the United States as an Alford plea," the statement said.

"This is a type of plea not recognised in Australia, whereby a defendant is able to acknowledge that the available evidence is sufficient to prove the case beyond reasonable doubt without admitting commission of the offences charged.

"In support of the challenge, the defendants served evidential material not previously available to the CDPP and AFP.

"If, at any stage in the conduct of legal proceedings by the office, there is a concern as to the sufficiency of available evidence, then the office will review the matter regardless of what stage the proceedings have reached in the court process.

"Accordingly, I have taken advice from the Queen's Counsel from the private bar who has been briefed in the matter and from lawyers within my office.

"After careful consideration of all matters, including the advice received, I reached the view that this office was not in a position to discharge the onus placed upon it to satisfy the court that the admissions should be relied upon and decided that these proceedings should not continue."

The Commonwealth has been ordered to pay Hicks's court costs.