Indian deputy consul general in New York, Devyani Khobragade, whose arrest in the US sparked protests from India has been formally indicted by a grand jury.
However, prosecutors said that Devyani Khobragade, 39, had also been granted immunity and that US officials had asked her to leave the country.
Prosecutors initially said Devyani Khobragade had already left but were later told by her lawyer that she was still in the US.
Devyani Khobragade was detained on charges of visa fraud and of underpaying her housekeeper in New York last month.
India had demanded a US apology for her “humiliation”, which included a strip-search.
A spokesman for the US Attorney’s Office for the Southern District of New York said in a statement that they “had been advised by the State Department that, pursuant to their request, Devyani Khobragade was to have left the United States this afternoon”.
However, later in the day “Ms Khobragade’s lawyer advised that she has not, in fact, departed the US”.
Daniel Arshack, Devyani Khobragade’s lawyer, later confirmed this, saying that she was “at home with her children”.
Devyani Khobragade had been handcuffed and searched after a complaint from the maid, Sangeeta Richard.
She denied all the charges and in turn accused Sangeeta Richard of theft and attempted blackmail.
Delhi ordered a series of diplomatic reprisal measures against the US, and relations between the two countries have been strained over the case.
Security barricades around the American embassy in Delhi were removed and a visiting US delegation was snubbed by senior Indian politicians and officials.
On Wednesday, the US embassy in Delhi was ordered to stop “commercial activities on its premises”. India also said that embassy cars could be penalized for traffic offences.
The US embassy in Delhi has been told to shut down a club within its premises which includes a pool, restaurant and tennis court, NDTV news channel said.