Charges have been dropped against musician Tiki Taane after police opted to settle the controversial case out of court.

Western Bay of Plenty police Inspector Karl Wright-St Clair said last night that Mr Taane's arrest resulted from a misunderstanding, and that police now respected his right to express himself as an entertainer.

"At the time the police believed the lyrics sung by Mr Taane could inflame the situation after security removed a patron from the nightclub. After the mediation meeting the police are now clear that this was not his intention."

Mr Taane, 34, was arrested in April at Tauranga's Illuminati nightclub after singing American rap group NWA's F*** tha Police while officers were dealing with an unrelated incident in the bar.

He was detained for around five hours and charged with disorderly behaviour likely to incite violence, but he claimed he did not know the police were ejecting someone from the bar at the time.

Mr Taane told the Herald last night that he was elated the charge had been dropped, because it had loomed over him for nearly five months.

"We've kissed and made up. And we've had this positive mediation. I have to acknowledge and commend the [Tauranga police] for ... doing the right thing. I'm totally happy with the result, but it's a good look for the police as well."

Mr Wright-St Clair said police had approached Mr Taane to seek a mediation which allowed both sides to openly express their views on how the events had unfolded.

"As a result of the meeting, the police involved and Mr Taane now have a better understanding of how this event impacted on each other."

The two parties had three meetings, similar to restorative justice sessions, each lasting around three hours.

Asked whether he stood by the song, Mr Taane said: "If I had known there was a problem in the venue at the time, I wouldn't have sung those lyrics.

"But I still do sing those lyrics and I still will sing those lyrics. So will many other performers.

"I wouldn't do anything to incite violence. I incite good times, I incite good vibes - it's my job."

Mr Taane claimed the story of his arrest had helped boost his profile overseas. Shortly after the incident, he played a sell-out tour of Australia and performed at English festival Glastonbury.

Bar promoter Patricio Alvarez-Riveros, 24, was also arrested at the time and charged with obstructing police and resisting arrest. He has denied the charges and will appear again in court on October 4.