Marine Le Pen has been acquitted of charges of inciting hatred on the December 2010 campaign trail in Lyon, France.
The charges relate to the National Front leader’s comments comparing Muslims praying in the streets to the Nazi occupation of France in World War Two.
In October Marine Le Pen told a court in Lyon she did not commit any offence.
Prosecutors said she had exercised her right to free speech and was not referring to all Muslims.
Marine Le Pen was charged in July 2014 after her immunity as a member of the European Parliament was lifted following a vote requested by French authorities.
In her 2010 speech to far-right FN supporters, broadcast by French media, Marine Le Pen said that France had initially seen “more and more veils”, then “more and more burkhas” and “after that came prayers in the streets”.
She said: “I’m sorry, but some people are very fond of talking about World War Two and about the occupation, so let’s talk about occupation, because that is what is happening here…
“There are no tanks, no soldiers, but it is still an occupation, and it weighs on people.”
The case was originally dropped last year by the Lyon court of appeal but was revived by anti-racism groups who made a civil complaint.
Praying in the streets was banned in Paris in 2011 in response to growing far-right protests.
In the same year France became the first EU state to ban public wearing of the face-covering Islamic veil (niqab).
The ruling came after Marine Le Pen’s anti-immigration FN gained a record number of votes in regional elections.
The FN led in six of the 13 regions after the first round of voting, though due to tactical voting it did not go on to win any regions in the second round.
The party received 6.8 million votes in the second round, amounting to a 27.36% share of the vote.
“Nothing can stop us now,” Marine Le Pen told supporters after the result announcement.
“By tripling our number of councilors, we will be the main opposition force in most of the regions of France.”
Nicolas Sarkozy’s conservative Union for a Popular Movement (UMP) party and its allies have taken first place in the first round of French local elections, partial results show.
Projections suggest that Marine Le Pen’s far-right National Front (FN) – despite strong gains – came second with about 25% of the vote, behind the conservatives on about 30%.
President Francois Hollande’s governing Socialists came third with 21%.
Voters are electing representatives in 101 departments, or counties, charged with issues like schools and welfare.
The results mean the second round on March 29 will see a run-off between the UMP and the FN in many constituencies.
Former President Nicolas Sarkozy said outcome of the elections demonstrated “the French people’s profound desire for change”.
“The conditions for a massive swing back to the right and the centre are in place,” he added.
Nicolas Sarkozy also ruled out any “local or national” deals with the FN in constituencies where one of the two parties was involved in run-offs with the Socialists.
In the past, voters for rival parties have rallied against the far right group in the second round of voting.
The poor results for the Socialists follows on from their defeats in municipal and EU elections last year.
Some polls ahead of the vote had indicated that Marine Le Pen’s FN could come top in the first round.
Marine Le Pen had been hoping the elections would build momentum ahead of her expected bid for the presidency in 2017.
Socialist PM Manuel Valls welcomed the news that the FN had scored less that some had predicted, saying the results showed it was not the strongest force in French politics.
However, Marine Le Pen called for Manuel Valls to resign, celebrating what she said was a “massive vote” for her party, exceeding its performance in the European Parliament elections.
For the first time, voters in these elections are not choosing single candidates – but pairs of candidates – one man and one woman – in order to enforce strict gender equality in local politics.
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