An extortion charge has been dropped against a discredited whistleblower at the centre of corruption claims levelled at a West Australian hospital.

Since March, Michelle Marie Foley has signalled her intention to fight allegations of trying to extort $43,000 from Health Solutions WA (HSWA), which runs the Peel Health Campus south of Perth where she used to be chief operating officer.

On Thursday, the charge was dropped by state prosecutors, who told Chief Magistrate Steven Heath it was no longer in the public interest to pursue the allegation of demanding property by oral threats.

Ms Foley's damning allegations last year to a WA parliamentary committee against the privately-run Peel Health Campus sparked a government inquiry.

But her whistleblowing deeds were undermined dramatically when previous criminal charges in the US emerged, along with various identities.

Ms Foley was then accused of attempting to extort the money from her former employers with a threat she would release documents in her possession to the media.

A police bid to extradite Ms Foley from Victoria to WA to face the charge then failed, and seven months on, it was dropped altogether.

Ms Foley, appearing via video link from Geelong, said nothing except to thank the court.

The discontinuance is the latest twist in a bizarre saga that has seen Ms Foley praised by a parliamentary committee for her bravery in coming forward with evidence against HSWA - before she admitted she had been imprisoned in the US for about six weeks in 2008 on fraud and identity theft charges.

Records in America show Ms Foley was wanted on a warrant issued in Georgia in 2011 over theft and fraud charges.

Police in WA were also called in to investigate claims she had falsified information on her application for her job at Peel Health Campus.