Cambodia's highest court on Wednesday acquitted two men -- seen by rights groups as scapegoats -- sentenced to 20 years in prison for the 2004 murder of a prominent labour leader.

Chea Vichea, a vocal critic of Prime Minister Hun Sen's government, was gunned down in broad daylight at a newsstand in the capital Phnom Penh -- a killing decried by activists as an attempt to silence his labour union.

Days later Born Samnang and Sok Sam Oeun were arrested and quickly jailed for 20 years each in a verdict which rights watchdogs said was based on insufficient evidence.

The pair say they were framed by a group of police.

In 2008 the Supreme Court provisionally released the pair and ordered a retrial. But the Appeal Court last December ruled that there was enough proof of their guilt and confirmed the 20-year sentences.

After an appeal hearing on Wednesday, Judge Kim Pon at the Supreme Court said the charges against the men were dropped due to insufficient evidence, and ordered them released from jail.

"I am happy that the Supreme Court has rendered justice for me," Sok Sam Oeun told reporters.

Rights activists immediately applauded the court's ruling.

"We welcome the court's decision. They were just artificial killers," Am Sam Ath, of local rights groups Licadho, told AFP.

No other suspects have been arrested for the murder.

Chea Vichea founded the Free Trade Union of Workers of the Kingdom of Cambodia along with opposition leader Sam Rainsy, and organised many protests for the rights of garment workers.

A statue of him was unveiled in May in a rare public tribute to a champion of worker rights in the impoverished kingdom.

Campaigners say his murder is a symbol of the kingdom's culture of impunity for powerful interest groups determined to muzzle dissent.

"Although today's decision represents a victory of sorts for the two accused, justice for Chea Vichea remains elusive," the Cambodian Center for Human Rights and other local campaign groups said in a joint statement.

"His real killers remain at large and the Cambodian authorities must reinvestigate the case in order to demonstrate that impunity does not reign in Cambodia," they added.

The Office of the United Nations High Commissioner for Human Rights also welcomed the acquittal and called for a "full investigation" into the murder.