Police arrested Tony Miano, a US citizen, in Wimbledon on Monday afternoon after he preached about sexual immorality and the need for abstinence.
At the police station, Miano was photographed, fingerprinted and had a DNA sample taken.
According to the Christian Legal Centre, which supported Miano, he was given the option of accepting a £90 fine that would secure his immediate release and allow him to return to the UK.
The investigating officer later said he would have to seek prosecution after Miano affirmed he felt his preaching had been acceptable in a public place and that he would do the same again tomorrow.
Later however, Miano was told the inspector had decided to release him with no further action being taken and he was freed at midnight, after just over seven hours in police custody.
Mr Miano said: "The language I used was not homophobic, as I was not promoting fear or hatred of homosexuals. I began my message by assuring the people that mine was not a message of hate but of love. I was simply explaining a passage in the Bible which speaks of sexual immorality and that people should abstain from it (1 Thessalonians 4:1-12).
"I did not speak solely about homosexuality as a form of sexual immorality but also about any kind of sex outside of marriage between one man and one woman, as well as lustful thoughts. All of these are considered mainstream Christian positions and have been taught and believed by Christians for thousands of years.
"It was very distressing to be arrested and interrogated for openly expressing my deeply held Christian beliefs."
Andrea Minichiello Williams, chief executive of the Christian Legal Centre, believes that Mr Miano's arrest has great significance in light of the current passage of the Government's Marriage (Same Sex Couples) Bill.
She said: "If we continue on the current trajectory, Tony's arrest will simply be the first of many.
"No assurances that the government gives will be enough. It is ridiculous to think that if the same sex marriage Bill goes through these kinds of incidents will magically cease. It's clear that there is already a clampdown on freedom of speech where people publicly express mainstream Christian views on sexual ethics.
"At the Christian Legal Centre we are ready to serve anyone who is challenged for expressing their Christian beliefs. We are ready to fight for freedom of speech and the right to preach the Gospel."