The family of an Indigenous man who was killed with a crossbow bolt in a remote Northern Territory community have been left dismayed after prosecutors had to drop charges against his alleged killer.

A 36-year-old man was killed in the community of Peppimenarti in September last year after he was shot in the chest with a crossbow.

It came after a four year dispute between families in the community.

An 18-year-old was charged with manslaughter by police over the death and was held in prison for more than 100 days – but prosecutors have now dropped the charge and admitted they had the wrong person.

Another man will now face charges of recklessly endangering life.

Lawyer Dana Levitt has helped the wrongly accused teenager to lodge a human rights complaint and told the ABC the incident is an example of poor remote policing in the Territory.