WikiLeaks founder Julian Assange has claimed victory after Sweden dropped its seven-year rape investigation against him – although he is yet to leave the Ecuadorian embassy where he claimed political asylum five years ago.

Speaking from a balcony at the embassy in London on Friday, a defiant Assange blamed the extradition policies of the European Union for his situation, adding that he is still wanted by British police and still faces being extradited to the United States.

“Today is an important victory for me and the UN human rights system,” he said.

“But it by no means erases seven years of detention without charge, in prison, under house arrest and almost five years here in this embassy without sunlight, seven years without charge, while my children grew up without me. That is not something that I can forgive. It is not something that I can forget.

“While today is an important victory and an important vindication, the road is far from over. The war, the proper war, is just commencing.”

Earlier, Sweden’s public prosecution service said in a statement that its director Marianne Ny “has today decided to discontinue the investigation regarding suspected rape (lesser degree) by Julian Assange,” adding that more information would be given at a press conference on Friday.

In a note sent to the Stockholm District Court, Ny said she had withdrawn the decision to pursue Assange’s arrest and discontinued the preliminary investigation.

Significantly, she said Assange’s failure to show up in Sweden and likely future noncooperation were important factors in her decision, noting that “the risk Julian Assange would evade having legal proceedings against him” had been of “continued importance”.

In part because of the fact “that to continue with legal proceedings would require Julian Assange’s personal appearance in court, there is no longer any reason to continue with this investigation,” her note concludes.

However, in a press conference in Stockholm on Friday morning, Ny said that if Assange were to return to Sweden before the statute of limitations for the crime elapses in August 2020, then the preliminary investigation could be reopened.

London’s Metropolitan police said in a statement that they remain obliged to execute a warrant for Assange issued by Westminster Magistrates’ Court following his failure to surrender to the court in 2012, and that Assange “remains wanted for a much less serious offence.”

On what the future holds for him, Assange said: “My legal staff have contacted the UK authorities, and we hope to engage in a dialogue on what is the best way forward. In some way the UK has been exploited by the EU, when it agreed to extradite people with no regard for the facts.

“That is to an extent a forced position the UK has been put into. And the first part of that is over. The UK refuses to confirm or deny at this stage whether a US extradition warrant is in the UK territory.

“While there have been extremely threatening remarks made in the US, I am happy to engage in a dialogue about what has occurred.”

Speaking in Edinburgh and responding to a question from Sky News on whether she would consider an extradition request from the United States against Assange, British prime minister Theresa May said: “Well, we look at extradition requests when we receive them on a case-by-case basis. In relation to Julian Assange, any decision that is taken about UK action in relation to him were he to leave the embassy would be an operational matter for the police.”

In a tweet posted hours after the Swedish authorities announced they were discontinuing the investigation, Assange said: “I do not forgive or forget.”

Earlier on, he tweeted this picture:

The case against Assange began in the summer of 2010, soon after WikiLeaks published the Afghan War Logs leaked by Chelsea Manning. Two WikiLeaks supporters alleged that, without their consent, Assange had failed to use a condom during sex, and one said he had penetrated her as she slept.

Assange was arrested and given bail by Sweden but refused to return to the country for questioning and possible charging.

After losing a series of legal appeals against extradition up to the UK Supreme Court, Assange fled to the Ecuadorian embassy in 2012 and claimed asylum. Assange has long insisted his stay in the embassy is unrelated to the Swedish case, but instead related to possible extradition to the US in connection with WikiLeaks’ activities.

Swedish prosecutors pursued a number of allegations of rape and sexual assault, though the sexual assault charges were dropped due to statute of limitations rules in 2015, leaving only a single charge remaining by the time Assange was questioned at the Ecuadorian embassy last year.

In February BuzzFeed News revealed Swedish prosecutors had finally obtained transcripts of his interview from Ecuadorian authorities, but that these answers – which Assange had given in English – had all been translated into Spanish. The prosecuting authority then had to spend weeks retranslating the interviews before evaluating them and reaching its eventual decision to drop the case.

Assange also paid tribute to Manning, the former US army private and source of some of WikiLeaks’ most famous revelations, who was released from prison this week after her 35-year sentence was commuted by Barack Obama in the last days of his presidency.

However, Assange conspicuously used male pronouns when referring to Manning, who announced she was a transgender woman shortly after being sentenced.

“After an extensive fight we and others managed to have him released 28 years early from his sentence,” Assange said.

Jamie Ross contributed reporting to this article from Edinburgh