Concerns were raised by the National Secular Society (NSS) after it received information that Christian doctor Richard Scott, had offered to pray for a patient described as "highly vulnerable" by an acquaintance earlier this year.
The NSS said it was told the patient "felt unable to express discomfort and was not able to raise the matter formally or change GP practice."
A fitness to practice inquiry was then launched against Scott, who is a GP at Bethesda Medical Centre in Margate, Kent.
The GMC stated it had a duty to investigate the issue despite the allegations of the unknown patient being heard second hand.
Scott, who estimates he offered prayer to about one in every forty patients told the Times the decision to drop the "vexatious" case was "good news".
"The result is encouraging to people like myself to share faith and pray with our patients," he added.
Scott has been instructed to obtain recorded consent from patients when discussing faith in the future.
Formal guidance warns doctors not to "impose" their beliefs on patients' and ensure professional boundaries remain "unbreached".
Andrea Williams, chief executive of the Christian Legal Centre, which backed Scott, said: "The outcome of this case not only gives reassurance to Christian doctors and professionals across the UK, but also clear guidance on how they can share their faith in the workplace without fear of losing their jobs."
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