A Thai court has cleared a media activist of criminal libel in a case filed by a company founded by Prime Minister Thaksin Shinawatra. The decision is seen as a step forward in media freedom in Thailand.

A Bangkok judge Wednesday declared media activist Supinya Klanarong and a Thai newspaper were not guilty in a case that had led to fears Thailand's media freedoms were being undermined.

Telecommunications company Shin Corporation filed criminal libel charges against the Thai Post and Supinya, secretary general of the Campaign for Popular Media Reform, in 2003.

Shin said its reputation had been unfairly damaged by a July 2003 article in which Supinya was quoted as saying the corporation's profits had tripled due to its political connections.

Prime Minister Thaksin Shinawatra founded Shin Corporation and his family recently sold its final stake in the company.

The company also has filed a separate civil lawsuit against Supinya and Thai Post officials, but lawyers say it is now likely the civil case will be dropped.

Supinya said Wednesday the verdict focused on freedom of the press in Thailand.

"It shows that what we believe in freedom, truth and justice still prevail in Thai society. And the case today referred to the principle of freedom of speech and freedom of the press. As my part, I had right to speak for the public interest, and as for Thai Post  they have the right to do their job for public interest as well," Supinya said.

The audience in the packed courtroom burst into applause on hearing the verdict. Chanida Chanyapate Bamford, with the rights group Focus on the Global South, was there.

"The court dismissed the case. It said that Supinya has done her job with good intention and good faith so there was no intention to harm Shin Corp in any way. So that was great," Chanida said.

Shawn Crispin, Asia program consultant for the Committee to Protect Journalists, said the decision was highly significant, especially in establishing the Thai judiciary's independence.

"This sets an important precedent for press freedom across the board here. This sends notice to the government that if the government has affiliated business interests that trying to use litigation against freedom of the press won't work. And that's a very important message," Crispin said.

Other regional media organizations also welcomed the decision. The Asian Human Rights Commission, in Hong Kong, said the judgment is a "good and fair" outcome, and upholds the principles of freedom of expression as set down in the Thai constitution.

Thailand's media have come under intense pressure from the government and businesses since Prime Minister Thaksin came to power in 2001, with growing accusations that the government has tried to suppress criticism. As a result, international media watchdogs have downgraded Thailand's international position on media freedom.

Wednesday's verdict comes as Prime Minister Thaksin faces growing protests. Thousands of people have demonstrated over the past month in Bangkok, calling on Mr. Thaksin to resign over allegations of abuse of power.