The group, owned by the Daily Mail, launched the action in the US to reveal the identity of Twitter user '@UnSteveDorkland'.
Twitter had been ready to comply with the request, but the mystery account holder - who is thought to have once worked for Northcliffe Media - challenged the order, leading to the company backing down.
In a statement emailed to the BBC yesterday (August 2), the tweeter slammed the case as "shameful and unnecessary".
They added: "By withdrawing the case against me they have, finally, recognised the futility of their heavy-handed approach and the entirely baseless nature of all the accusations they threw at me in a vainglorious attempt to divert attention from the real issue, namely their idea that by throwing money and bullying tactics at someone you can throttle freedom of speech.
"They underestimated me, they underestimated my lawyer Frank Sommers and they underestimated the power of the worldwide internet community."
Northcliffe has not yet commented on the action.
In legal documents filed in the US last month, lawyers for Northcliffe accused the tweeter of having gained information by hacking into an email address of someone working at the company.
It was also claimed that the person has conducted "surveillance" of employees.
Northcliffe denied that it wanted to prevent anyone from tweeting, and insisted that it was only focused on protecting its staff.
But the account holder strongly denied the allegations, and insisted that they started tweeting just to "make people smile".
"The management of Northcliffe Media should be spending its time, resources and attention on supporting, protecting and developing its loyal and hard-working staff, rather than attempting to suggest my tweets were in any way affecting morale or performance of the company," they said in a statement.
"I thank the thousands of people who have supported me in this campaign. Crack a smile for me tonight at this decision - I started tweeting as a way to make people smile and I hope we can all smile that justice has prevailed to
The @UnSteveDorkland account features a picture of actor George Clooney and has 2,549 followers. The blurb now states: "The man they tried to ban! Not a media man. Not a man of the north. Fan of Voltaire. Clearly a parody."