WikiLeaks founder Julian Assange believes there is now a covert police operation outside the Ecuadorian Embassy where he took refuge three years ago after a 24-hour guard was removed.
The Metropolitan Police said it had stopped its round the clock presence amid controversy over the escalating cost of the exercise - believed to be over £12 million.
A WikiLeaks official said he hesitated to call the move a victory because he believed Scotland Yard had merely swapped one form of policing for another.
The move was followed by a summons for the Ecuadorian Ambassador to a meeting at the Foreign Office to discuss the case, which has been deadlocked for years.
The meeting was held at the Foreign Office, where a spokesman said: "The head of the Diplomatic Service, Simon McDonald, summoned the Ecuadorean Ambassador today to register once again our deep frustration at the protracted delay.
"The UK has been absolutely clear since June 2012 that we have a legal obligation to extradite Assange to Sweden. That obligation remains today."
Assange has been granted political asylum by the Ecuadorian Government as part of his attempt to avoid extradition to Sweden over sex allegations, fearing he will be taken to the United States for questioning over the activities of WikiLeaks.
In a statement, the Metropolitan Police Service said it still intended to arrest him but added: "Like all public services, MPS resources are finite. With so many different criminal, and other, threats to the city it protects, the current deployment of officers is no longer believed proportionate."
Assange was arrested on a European Arrest Warrant in December 2010 and ordered to face extradition to answer sex allegations, which he denies. He has never been charged and has consistently offered to be interviewed inside the Embassy by the Swedish authorities.
He faces immediate arrest should he emerge from the embassy.
In its statement, Scotland Yard said: "Whilst the MPS remains committed to executing the arrest warrant and presenting Julian Assange before the court, it is only right that the policing operation to achieve this is continually reviewed against the diplomatic and legal efforts to resolve the situation.
"As a result of this continual review the MPS has today Monday, 12 October, withdrawn the physical presence of officers from outside the embassy.
"The operation to arrest Julian Assange does however continue and should he leave the Embassy the MPS will make every effort to arrest him.
"However, it is no longer proportionate to commit officers to a permanent presence.
"The MPS will not discuss what form its continuing operation will take or the resourcing implications surrounding it.
"Whilst no tactics guarantee success in the event of Julian Assange leaving the embassy, the MPS will deploy a number of overt and covert tactics to arrest him.
"This decision has not been taken lightly and the MPS has discussed it with the Home Office and the Foreign and Commonwealth Office.
"A significant amount of time has passed since Julian Assange entered the embassy and despite the efforts of many people there is no imminent prospect of a diplomatic or legal resolution to this issue.
"The MPS has to balance the interests of justice in this case with the ongoing risks to the safety of Londoners and all those we protect, investigating crime and arresting offenders wanted for serious offences, in deciding what a proportionate response is."
In a recent interview, Assange said he had not had any fresh air or sunlight for three years.
He said: "There are security issues with being on the balcony. There have been bomb threats and assassination threats from various people."
Swedish officials said recently they were optimistic about reaching an agreement with Ecuador which could pave the way for the questioning of Assange in London on outstanding accusations against him.
Last month, prosecutors dropped cases of alleged sexual misconduct against the 44-year-old but they say they want to question him about accusations of rape made after his visit to the country five years ago.
Justice ministry spokeswoman Cecilia Riddselius said talks between Swedish officials and their counterparts in Ecuador had been "very good, very constructive" and could lead to a general agreement on legal co-operation "in time for Christmas".
A WikiLeaks spokesman said it was difficult to read into the police statement, asking whether the presence outside the building will merely be replaced by covert officers.
He described the police operation as a "ridiculous siege".
Labour London Assembly Member Murad Qureshi said: "Since Julian Assange entered the Ecuadorian Embassy in 2012 taxpayers have had to fork out over £12m policing him. Of course we should do everything possible to apprehend Julian Assange so he can face a fair trial but there's no way spending such vast amounts of money could be justified indefinitely.
"We needed to see diplomatic efforts to resolve this situation, encouraging Swedish prosecutors to travel to the embassy to interview Assange, or even contribute to the costs the Metropolitan Police have incurred.
"With neighbourhood policing being decimated by cuts, and violent crime once again on the rise in the capital, we need to see this money spent on protecting Londoners not police officers providing window dressing for the Ecuadorian Embassy."
WikiLeaks spokesman Kristinn Hrafnsson said the police were merely calling off the physical presence and replacing it with a covert operation, which "we always knew was in place".
He told the Press Association: "There is no indication what this covert operation means, or how much it will cost. They will still arrest Julian if he steps outside the embassy so there is no real change to the situation, other than the removal of uniformed police officers.
"The UK Government could have resolved this situation a long time ago by giving an absolute guarantee that Julian would not be extradited to the United States where there is an ongoing criminal investigation into espionage."
Mr Hrafnsson said he had spoken to Assange about the development, and he agreed it did not change his situation.