A judge in Cyprus has ordered that a British teenager be remanded in custody for eight days after she was arrested last week on suspicion of falsely accusing 12 Israeli tourists of gang rape.

The 19-year-old, who has not been named, was escorted into a packed courtroom outside the party resort of Ayia Napa in handcuffs on Tuesday. She was told she would face charges of “public mischief” for alleging she had been sexually assaulted by the tourists – aged 15 to 18 – in a hotel room in the town on 17 July. Her mother was also present in the court.

The judge, Tonia Nicolaou, told the court: “The charges are not so serious but it is the consequences they have had, the detainment of 12 young people, including minors, that must be considered serious. A lot of people, a lot of families, have been distressed.”

Under article 115 of the former British colony’s penal code, the woman could face up to a year in prison and a fine of about €1,700 (£1,500), Nicolaou said. The judge recommended that she be detained in the island’s state–run prison in Nicosia, the capital, until she returns to court to plea to the charges.

“As the defendant has no direct bond with Cyprus and could attempt to flee, I recommend that she be remanded in custody until August 7,” she said. “Every defendant is innocent until proven guilty but considering all the facts, there is enough in my view to lead to the conclusion that charges of public mischief [be levelled] in this instance.”

Police have said the woman voluntarily recanted her rape allegation.

Ayia Napa, in south-east Cyprus, is a magnet for young holidaymakers attracted by its reputation as a party town and its white sand beaches. The UK is the island’s biggest tourist market, with about 1.3 million Britons travelling there every year. Israel is also becoming a key source of visitors.Some of the 12 Israelis have said they will be claiming damages from the Briton.

Speaking to the Guardian, the woman’s lawyer, Andreas Pittadjis, said he expected her to enter a plea when she returned to court. He said he had asked for the case to be adjourned so he could gather vital evidence, including a video that had gone viral, purporting to show several men having sex with the woman.

“The charges today have been based on her lying to police about an imaginary crime,” Pittadjis said. “It seems to me that the whole world has seen this video except the defence team. The circulation of this video is much more serious [than the charges]. We want to know who leaked it.”

With its economy only just recovering from a banking crisis and hugely dependent on tourism, the incident and negative publicity has been embarrassing for Cyprus. The mayor of Ayia Napa said the resort had been “publicly defamed” by the Briton.

“Cyprus is not at fault, please be kind to Cyprus,” Pittadjis exhorted reporters outside the courtroom.

It remains unclear whether DNA tests were ever conclusive. Late last week the director of laboratory work at Nicosia’s Institute for Neurology and Genetics, where the examinations were being conducted, described the process as “extremely complex and difficult … to include and exclude [people].”

Michalis Michael, a police spokesman in Nicosia, said on Tuesday it had been impossible to justify detaining the Israelis. “There was no case,” he said.