Marie Dinou, 41, had refused to give police officers her name, address or reasons for travel.
They questioned her because she was “loitering between platforms” at Newcastle Central station on Saturday.
She was convicted of an offence under the Coronavirus Act 2020 at North Tyneside Magistrates’ Court on Monday, despite not being present at the hearing.
A judge fined her £660 and ordered her to pay a £66 victim surcharge and £85 in costs.
Following concerns raised by legal professionals, the conviction is to be quashed and police admitted it “shouldn’t have happened”.
It comes amid confusion over the extent of the new coronavirus laws and concern about inconsistent enforcement between different police forces.
British Transport Police (BTP) said it had conducted a review with the Crown Prosecution Service (CPS) that “established that Marie Dinou was charged under the incorrect section of the Coronavirus Act 2020”.
In response to questions from The Independent, the force said it had asked North Tyneside Magistrates’ Court for the case to be relisted and the conviction to be set aside.
“Having reassessed the matter, BTP will not pursue any alternative prosecution,” a spokesperson said.
Ms Dinou had been kept in police custody for two full days between her arrest on Saturday morning and the court hearing on Monday.
Ms Dinou had been suspected of a railway ticket offence, but the Coronavirus Act 2020 – which only applies to “potentially infectious persons” was used to prosecute her instead.
Deputy Chief Constable Adrian Hanstock said “There will be understandable concern that our interpretation of this new legislation has resulted in an ineffective prosecution.
“This was in circumstances where officers were properly dealing with someone who was behaving suspiciously in the station, and who staff believed to be travelling without a valid ticket. Officers were rightfully challenging her unnecessary travel.
“Regardless, we fully accept that this shouldn’t have happened and we apologise. It is highly unusual that a case can pass through a number of controls in the criminal justice process and fail in this way.”
The senior officer added: “BTP and the CPS will undertake a more detailed review of the case to ensure that any lessons to be learned are integrated into our shared justice processes.”
BTP said it has shared official guidance on how to enforce the new laws with officers “to help them interpret the new legislation”.
Mr Hanstock said officers would continue to “engage” with people to establish their reasons for journeys during the lockdown and could still enforce the law.
New guidance on the Coronavirus Act 2020 is to be published on Friday.
It came into force on 25 March and had been drafted at a time when the threat was perceived to mainly come from people entering the UK from abroad.
The law enables health officials to direct people to hospitals or testing centres, and gives powers for police to enforce their instructions.
Schedule 21 creates an offence of “failing to without reasonable excuse to comply with any direction, reasonable instruction, requirement or restriction” imposed as part of the act.
But the law can only apply to “potentially infectious persons” and is separate to the newer Health Protection Regulations that allow police to enforce the UK lockdown.
More than half the court buildings in England and Wales have been closed because of coronavirus, and those still operating are only dealing with urgent matters including remand hearings and coronavirus-related cases.
Police have been instructed to use enforcement as a last resort as they grapple with the rapidly drawn up new laws, which underwent little parliamentary scrutiny.