The police bureau in Zhaotong city, Yunnan province, cleared a woman of wrongdoing for stopping Premier Wen Jiabao's motorcade in September to petition him about land compensation.
On Monday, Yiliang county authorities gave Liang Yonglan , 29, seven days of administration detention for disturbing the public order, after kneeling on the road as Wen's motorcade approached during a tour of the quake-hit area on September 8.
She was released after her husband paid 1,000 yuan (HK$1,240) in bail, according to an initial report by Caixin News.
But Zhaotong Public Security Bureau spokesman Li Jie acknowledged that Liang was charged in error.
The sanction was nullified under a section of the police law that allows police authorities to correct mistakes made by lower-level officials. Zhaotong police released a statement online, saying that its officers decided to act after investigating the case on Wednesday.
The statement urged the Yiliang county police to "learn from the experience" and "to carefully deal with the aftermath settlement".
"I'm not sure if the family will receive compensation," Li said.
Citing Liang's husband Hu Jifei, Caixin reported that a deputy chief of the county police apologised to her in person yesterday morning and that the family did not intend to seek compensation.
The incident happened during the premier's visit to Yiliang county to survey the aftermath of two earthquakes that damaged more than 400,000 houses and caused economic losses of 3.69 billion yuan in Yunnan and Guizhou provinces.
Liang and three other villagers used Wen's visit as an opportunity to complain to the premier about the meagre compensation they received when their land had been taken by the government.