Mark Schofield, 55, nearly lost his life in August 2012 when he was dragged under a twin-axle caravan towed by a Range Rover near Tewkesbury.
He suffered two punctured lungs and needed treatment at the scene to save his life before he spent two weeks in hospital in intensive care, reports the Gloucestershire Echo.
Philip Davies, 62, was charged with dangerous driving, but when his trial began at Gloucester Crown Court, the prosecution decided not to pursue the charge.
Prosecuting counsel Mark Worsley instead called for the case to be sent to a magistrates court on a lesser charge of careless driving.
But the case was thrown out after a judge ruled there had been a legal error and there was no authority for the case to be tried in her court.
The prosecution tried to reinstate the dangerous driving charge at Gloucester Crown Court but it was rejected by the judge, who said it was unfair on the defendant, given the time that had elapsed since the accident.
In a joint statement, Mr Schofield and his wife said: “Over the past two years we have felt continually let down by the judicial system and today is no different.”
National cycling charity CTC also condemned the verdict.
CTC’s Road Justice campaign coordinator, Rhia Weston, told road.cc: “I’m not surprised that Mark feels let down by the justice system as there has been nothing just about the way this case was handled.
“For the judge to say the decision not to proceed was made out of fairness is a farce. It is not fair on the victim and it’s not fair on the wider public whose safety is put in danger by this relaxed approach to bad drivers.
“If the prosecution had proceeded with the trial for dangerous driving from the word go, none of this would have happened.”