The UK is to make a formal protest to the government of Ecuador over the country's decision to "harbour" Julian Assange, the Foreign Office has said.
The Wikileaks co-founder sought asylum at London's Ecuadorean embassy in 2012 to avoid extradition to Sweden.
UK officials said the bill for policing the embassy, which stands at £12m ($18.8m; €16.8m), was "unacceptable".
Earlier, Swedish prosecutors dropped two sex assault claims against Mr Assange, who had denied the claims.
Mr Assange still faces the more serious accusation of rape, which he also denies.
'Abuse of relations'
The British Ambassador in Quito, Ecuador's capital, is to make the formal protest to the Ecuadorean government today.
"Ecuador must recognise that its decision to harbour Mr Assange more than three years ago has prevented the proper course of justice... It is completely unacceptable that the British taxpayer has had to foot the bill for this abuse of diplomatic relations," said Foreign Office minister Hugo Swire.
Mr Swire said the UK "continues to have a legal obligation" to extradite Mr Assange over the rape allegation.
"I have instructed our ambassador in Quito to reiterate to Ecuador that the continuing failure... to bring this situation to an end, is being seen as a growing stain on the country's reputation," he added.
Mr Assange sought asylum three years ago to avoid extradition to Sweden, fearing he would then be sent to the US and put on trial for releasing secret American documents.
The UK has paid for policing around the embassy in Knightsbridge, central London, for the past three years.
The formal protest comes after Swedish prosecutors dropped their investigation into an allegation of sexual molestation and an accusation of unlawful coercion against Mr Assange because they ran out of time to question him.
An additional alleged incident of sexual molestation will be "time barred" - that is, time will run out to question Mr Assange - on 18 August.
The Swedish statement also said an allegation of rape was due to expire on 17 August 2020, but that investigation would continue.
The alleged events took place in August 2010.
Mr Assange said he was "extremely disappointed", adding the Swedish prosecutor had avoided hearing his side of the story.
Under Swedish law, charges cannot be laid without interviewing the suspect. \
"There was no need for any of this. I am an innocent man. I haven't even been charged," said Mr Assange.
"From the beginning I offered simple solutions. Come to the embassy to take my statement or promise not to send me to the United States. This Swedish official refused both. She even refused a written statement."
However, Sweden's director of public prosecution said a request to interview Mr Assange inside the embassy had been submitted but permission was yet to be granted.
Marianne Nye said she still hoped to arrange an interview as there were "ongoing negotiations" between Sweden and Ecuador.
One of Mr Assange's lawyers, Helena Kennedy, said: "Julian Assange has spent more time incarcerated in the small rooms of the embassy, with no access to fresh air or exercise and contrary to international law, than he could ever spend in a Swedish prison on these allegations."
Mr Assange's mother Christine said: "I have privately shed many tears for many years - the terrible injustice of it all."
Wikileaks has published thousands of secret documents, which have caused intense embarrassment for the US and lifted the lid on diplomatic relations.