Rudd, 60, appeared in court on Thursday after police raided his Tauranga home. He was then accused of attempting to hire a person to kill two others, and of threatening to kill yet another. He was also charged with possession of methamphetamine and cannabis.
Mr Mabey said he was advised by Mr Hollister-Jones that he had reviewed the police file and the available evidence to support the charge of attempting to procure murder. "He had formed the view that there was insufficient evidence to justify that charge. He has now withdrawn the charge."
Mr Mabey added: "The charge ... should never have been laid. The Crown solicitor's opinion was not sought. The charge is now withdrawn - within 24 hours of Mr Rudd's first appearance in court."
He said his client had "suffered unnecessary and extremely damaging publicity as a result of widespread and sensational reporting of a very serious allegation, which on any basis was never justified".
"The damage to Mr Rudd is incalculable. Questions arise as to the degree of care taken by those responsible for arresting and charging him with attempting to procure murder."
Barrister Gary Gotlieb, a former New Zealand Law Society president, said the first thing Rudd needed to do was deal with the remaining charges he faced, then weigh his options.
Mr Gotlieb said the decision to lay the charge could leave police open to legal action.
"I think there is sufficient, significant damage to his reputation nationally and internationally that he could sue for damages. It does beggar belief that the police did not consult with the Crown before laying such a serious charge, particularly in such a high-profile case, then to have such an extraordinary quick back-track does not make sense."
The Bay of Plenty Times Weekend returned to Rudd's house yesterday afternoon after he had received the news the charge had been dropped.
A person outside the property said Rudd was up in the house and drumming could be heard. Only one bodyguard remained and the atmosphere seemed more upbeat and relaxed than earlier in the day.
One of the alleged intended victims was at home in the garden when the Bay of Plenty Times Weekend visited. He was friendly and polite but said he had been advised not to talk.
Police said yesterday: "In matters of this nature, the Crown Solicitor then becomes responsible for the prosecution.
"Today [Friday], the Crown reviewed the charges and made the decision to withdraw the charge of attempting to procure murder.
"Other charges remain before the court."
Police refused to comment further when questioned about correct procedure in cases such as these.
The Bay of Plenty Times Weekend sought answers to questions, including which police officer made the decision to lay the charge, whether an internal investigation was under way and if a senior officer was being brought in from another district to review the case's handling.
But a police spokeswoman refused to provide answers, saying with the case before the court they had "nothing further to add" to the original statement.
A spokeswoman for the Solicitor-General said police did not have to consult the Crown to seek permission to lay charges.
"They will often consult with the Crown Solicitor in relation to cases but it is a matter for the police to make a decision on charges, etc., having regard to the evidence that they have that would support a particular charge."
Police Minister Michael Woodhouse, who is in Monaco, could not be contacted and Labour police spokeswoman Jacinda Ardern declined to comment. Rudd still faces the remaining charges and could face a maximum of seven years if convicted of threatening to kill.
He has been remanded on bail until November 27, when he will reappear in court.
The drummer's bail conditions include that he must live at his Bureta home.
