Tulisa Contostavlos said her life had been "ruined for a year" after her trial for allegedly brokering a drugs deal collapsed.
The singer issued a scathing broadside at undercover reporter Mazher Mahmood, who was the main prosecution witness, after a judge said there were "strong grounds" to believe he had lied on the witness stand and "had been manipulating the evidence".
On a day of dramatic developments the Sun on Sunday suspended the journalist known as the Fake Sheikh amid questions over whether he could now face a perjury investigation.
Former N-Dubz star Ms Contostavlos went on trial after allegedly boasting that she could "sort out" cocaine for Mr Mahmood and put the reporter in touch with her rapper friend Mike GLC, who was also cleared today despite admitting supplying half an ounce (13.9g) of the drug.
Ms Contostavlos had denied brokering the deal, which was exposed in the tabloid last June.
And the 26-year-old could not conceal her delight as Judge Alistair McCreath told the jury trying the case it could not continue, smiling broadly before punching the air with both arms and tearfully hugging supporters after leaving the dock.
Dressed in a pale blue blazer, dark trousers and a floral shirt, she had seemed in good spirits after arriving at Southwark Crown Court, appearing confident that she would be cleared as she sat in the dock waiting for the hearing to start.
After the judge formally threw out the case, she appeared on the steps of the court and read an emotional statement.
She said: "Let me be perfectly clear. I have never dealt drugs and never been involved in taking or dealing cocaine.
"This whole case was a horrific and disgusting entrapment by Mazher Mahmood and the Sun on Sunday newspaper."
Ms Contostavlos was unequivocal in her criticism of the investigation that saw her end up in the dock.
"Mahmood has now been exposed by my lawyers openly lying to the judge and jury. These lies were told to stop crucial evidence going before the jury," she said.
"This evidence shows that I told Mahmood's long-standing driver that I disapproved of drugs, which is the truth.
"It is clear that the driver was pressured to change his statement to strengthen Mahmood's evidence and to damage mine.
"Thankfully the lies have been uncovered and justice has been done."
Mr Mahmood had told the former N-Dubz singer she was being considered for a leading role in a Slumdog Millionaire-type film tipped for Oscar glory alongside possible co-star Leonardo DiCaprio.
She said: "This case only happened because Mahmood and his team tricked me into believing I was auditioning for a major movie role. They targeted me at a time when things were going badly for me and they had no mercy.
"Mahmood got me and my team completely intoxicated and persuaded me to act the part of a bad, rough, ghetto girl.
"They recorded this and produced this as evidence when I thought it was an audition. It was a terrible thing to do.
"As my lawyer said at the outset, we have now succeeded in exposing the real culprits and, most importantly, the real liar.
"As someone who has had my life ruined for the last year I strongly believe that this type of entrapment should not be allowed to happen to anyone."
She called on both the police and News UK to investigate Mr Mahmood and his team "to put an end to his deceit in pursuit of sensational stories for commercial gain".
Thanking her fans and legal team for supporting her through the "terrible ordeal", she added: "I have not been able to work for a year, and I am now looking forward to resuming my career."
The collapse of the case hinged on evidence given by Mr Mahmood about a statement given to police by a driver called Alan Smith, who had picked the star up from a London hotel in May last year.
It was originally anticipated Mr Smith would give evidence that Ms Contostavlos had said she "disapproves" of drugs but "changed his mind" after a conversation with the undercover reporter, the judge said.
Giving evidence during a pre-trial hearing last month Mr Mahmood denied discussing with Mr Smith the statement or Ms Contostavlos's comments during the car journey, the court heard.
But the judge said when he gave evidence last week after the star's trial started he "gave answers which were entirely inconsistent" with his earlier evidence.
At trial, the reporter said he had discussed what was said in the car with Mr Smith and said the driver had sent him a copy of his statement, prosecutor Tim Cray told the judge.
Mr Smith had told Mr Mahmood there was a problem with his statement in that he could not remember who had made the comment disapproving of drugs and police had "told him to leave it", the court heard.
Mr Mahmood then advised him to tell police about the problem with the statement, the prosecutor said.
The alleged exchange was said to have taken place during the afternoon of June 24 - three days before Mr Mahmood gave evidence that he had not discussed Mr Smith's statement or evidence.
It can now be reported that defence counsel attempted to have the case dismissed before the trial started but their application was rejected.
However the judge said today that "the landscape has changed" and he would not have allowed the case to continue if he had been aware of "two very important factors".
He said: "First there are strong grounds for believing that Mr Mahmood told me lies when he gave evidence to me on the 27th June.
"Secondly, there are also strong grounds for believing that the underlying purpose of these lies was to conceal the fact that he had been manipulating the evidence in this case by getting Mr Smith to change his account."
The Sun later said Mr Mahmood, who claims to have helped put more than 100 criminals behind bars and risked his life on a daily basis to lift the lid on the murky world of crime, has been suspended.
A spokesman said: "We are very disappointed with this outcome, but do believe the original investigation was conducted within the bounds of the law and the industry's code. This was demonstrated by the CPS decision to prosecute.
"The Sun, of course, takes the judge's remarks very seriously. Mr Mahmood has been suspended pending an immediate internal investigation."
A Scotland Yard spokesman said: "We are aware of today's decision and will continue to liaise with the CPS to consider our response."
Mike GLC - real name Michael Coombs - pleaded guilty before the start of the trial to supplying cocaine for £820 but also walked free after the judge ruled the case could not proceed against him.
He broke down in tears and gleefully embraced defence barrister Jeremy Dein QC seconds after leaving the dock.
Fazer, Tulisa's former boyfriend and N-Dubz bandmate, welcomed the ruling.
He tweeted: "Thank god for this!! @officialtulisa #Relieved."
The judge concluded by saying: "I wish to emphasise that the decision I have reached is based on the evidence as I have understood it and the legal principles which I must apply to the facts as they appear to me to be.
"My view of the evidence cannot bind any other court which may (or may not) be called on to consider this matter in a different context."