Megan Stackhouse and her fiancee Lucinda Mann were victims in a horrific road rage attack which saw a man accused of snapping the arm of one and knocking the other out.

Police charged Jay Allen Barbeau, 48, with a string of assault and criminal damage charges after the women told officers he had smashed the rear window of their car, twisted Stackhouse's arm until it broke and knocked Mann unconscious.

The brutal altercation, in Bend, Oregon last month, made international headlines and the couple were inundated with message of sympathy and support.

But in a stunning twist, all the charges against Barbeau have been dropped and he has been released from jail after Stackhouse, 34, and Mann, 26, were found to have fabricated details of the alleged assaults.

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Barbeau, who had been in jail since his arrest on June 1 until he was freed on Monday, had admitted breaking the car window but denied laying a finger on either of the women.

In another shock development, country prosecutors have charged Stackhouse with assault in relation to a separate road rage incident that allegedly took place in May.

Police will allege Stackhouse punched a woman in the face after twice ramming her car on Mother's Day.

District Attorney John Hummel said he decided to drop the charges against Barbeau after a review of medical records, witness accounts and previous incidents involving the two women.

"I have no confidence in the credibility of Mann and Stackhouse," Hummel told the court, according to a report published in the Oregonian.

Defence lawyer Casey Baxter said his client admitted to punching the women's window in a fit of anger after their Kia Soul had hopped a kerb while leaving a cider festival, nearly slamming into his pick-up truck and the women repeatedly flipped the bird at him and his wife.

"He really never once struck any of those women," Baxter said. "The entire event was a terrible lie that turned into international condemnation."

In a series of sensational interviews last week, the pair claimed Barbeau tailed them for several blocks in his pick-up truck after Stackhouse cut in front of him while leaving the festival.

Megan Stackhouse, 34, left, and her fiancee Lucinda Mann, 26. Photo / Supplied
Megan Stackhouse, 34, left, and her fiancee Lucinda Mann, 26. Photo / Supplied

They claimed Barbeau then jumped out of his truck, stormed over to their car and shattered its rear window and tail-light with his fist.

Stackhouse told the Washington Post that Barbeau later reached into the car and snapped her arm with his bare hands.