A £10,000 fine has been dropped after it emerged a party attended by up to 100 people was actually multiple smaller gatherings.
A student was ordered to pay the five-figure sum for breaching Covid regulations after police broke up the bash in Newland, Lincoln, last month.
At the time, Lincolnshire Police said they were left with "no option" but to levy the maximum penalty.
The force has now dropped the action due to "evidential difficulties".
Chief Constable Chris Haward said the FPN (fixed penalty notice) had been issued in "good faith".
But, he said, further investigation revealed it was not a single pre-arranged party.
"It was in fact a number of people within the same accommodation building having individual parties," he said.
"It was an evolving situation that led to a large number of people drinking and socialising within the accommodation at the same time."
He described the £10,000 fine as "significant", adding it was necessary to consider the legal burden of proof placed on the police if it went to court.
However, "a large number" of smaller fines issued for breaching Covid regulations "still stand", he added.
Home Secretary Priti Patel recently announced fines of £800 for anyone attending a house party of more than 15 people, under new Covid measures.