A New York judge dropped all criminal sexual assault charges against ex-IMF chief Dominique Strauss-Kahn on Tuesday after prosecutors lost faith in the credibility of his accuser.

But the formal end of the case awaited the outcome of a last-ditch emergency appeal.

New York State Supreme Court Justice Michael Obus accepted the prosecutors' request for dismissal of all charges. The move left the man once seen as the leading contender to be the next president of France close to freedom and the chance to try to rebuild his tarnished political career.

The former head of the International Monetary Fund appeared in court with his wife Anne Sinclair by his side and the pair left the hearing smiling, amid a throng of media.

He later issued a statement saying his life in recent months had been a nightmare and that he looked forward to life returning to more normal times.

Strauss-Kahn was not yet free to return to France, after New York State Supreme Court Justice Michael Obus stayed his dismissal of the case for an emergency appeal.

A lawyer for the accuser, hotel maid Nafissatou Diallo, had requested a special prosecutor to continue the criminal case. Earlier on Tuesday, Obus dismissed the request. But Diallo's lawyers appealed that decision. Obus said the appeal's court would rule on that later on Tuesday, meaning Strauss-Kahn must await that verdict before he is free to return to France.

Prosecutors with the Manhattan District Attorney's office on Monday outlined how they lost faith in the accuser, hotel maid Nafissatou Diallo, a 32-year-old immigrant from Guinea who alleged Strauss-Kahn attacked her in his luxury hotel suite and forced her to perform oral sex.

While her account of the assault remained steadfast, Diallo told a series of lies about her past and about what happened immediately after the incident in the $3,000-a-night suite in New York's Sofitel hotel on May 14, undermining her credibility, prosecutors said.

Physical evidence was unable to prove lack of consent, leaving the case hinging on the believability of the accuser. But with her testimony changing again and again and as more and more lies about her past emerged, prosecutors concluded in a 25-page filing, If we do not believe her beyond a reasonable doubt, we cannot ask a jury to do so.

Strauss-Kahn thanked friends in France and in the United States who have believed in my innocence and said he was most deeply grateful to my wife and family.

We will have nothing further to say about this matter and we look forward to returning to our home and resuming something of a more normal life, he said.

The case pitted supporters of Strauss-Kahn who said he was the victim of an overzealous U.S. criminal justice system versus backers of Diallo who complained it was an example of sexual assault victims being denied justice.

NOT CLEAR YET

Three months ago, Strauss-Kahn was the world's leading financial diplomat and a confidant of presidents rescuing debt-ridden nations. His downfall was shocking. Pulled from an Air France first-class seat by police, he was thrown into New York City's Rikers Island jail on charges of attempted rape.

Yet he is not entirely in the clear. Diallo has filed a civil lawsuit against him, and he faces a separate inquiry in France from a writer who alleged Strauss-Kahn forced himself on her during a 2003 interview in Paris.

Diallo's lawyers are also taking the case to France where they had been trying to establish a pattern of sexual abuse by Strauss-Kahn and had tried to contact other women who may have had similar encounters.

Douglas Wigdor told reporters in Paris that many women around the world had contacted his office to recount similar claims of aggressive behavior by the former IMF head.

Strauss-Kahn needs to explain how in nine minutes he was able to convince a woman who he had never met before to engage in a sexual relationship on a hotel floor, Wigdor said, adding that there was no explanation other than sexual assault.

Diallo's French attorney Thibault de Montbrial said there had been pressure on potential witnesses in France not to speak up about similar incidents involving Strauss-Kahn.

De Montbrial told Reuters he filed a complaint on Tuesday alleging that an ally of Strauss-Kahn's telephoned one woman and offered her money in exchange for her silence.

POLITICAL FUTURE

Strauss-Kahn, a former French finance minister, could make a dramatic return to French public life, but with his image tarnished by widespread reporting in France about his sexual behavior, most political analysts doubt he would risk competing with President Nicolas Sarkozy on April's ballot.

Whatever has been said, a man with the abilities of Dominique Strauss-Kahn can be useful to his country in the months and years to come, Francois Hollande, the frontrunner among six candidates for the Socialist primary, told France Inter radio.

Asked whether Strauss-Kahn could take part in the October vote to choose the party's presidential candidate, Hollande said: That depends on him.

French Socialists welcomed the dropping of charges and said they hoped Strauss-Kahn would return to public life where his expertise on global economics was sorely needed.

Socialist presidential hopeful Manuel Valls called the affair an extreme waste for Strauss-Kahn and for France and even ruling party Defence Minister Gerard Longuet said he deserved better and looked forward to listening to his ideas.