The Times claimed the 55-year-old Australian had contributed to the retirement of 13 Olympic athletes.
But swimming chiefs have given their backing to Sweetenham, appointed in 2000, following a three-month inquiry.
"Broadly speaking, the report suggests allegations of bullying are not proven," said the official statement.
Sweetenham still faces some tough questioning when he returns to this country after spending the festive period in his homeland.
David Sparkes, chief executive of British Swimming, told BBC Five Live he planned to meet the Queenslander to discuss the repercussions of the investigation.
"We will sit down with Bill at the end of the month to see if any lessons can be learned," said Sparkes.
SWEETENHAM FACTFILE Took over from Deryk Snelling as British performance director on 1 November, 2000 Recently signed a new contract that will take him up to the 2008 Olympics in Beijing Four times Australia's Olympic head coach; eight years as Australia's national coach; four years as Hong Kong's national head coach
Sparkes also defended the independent inquiry carried out by former police officer Bill Roberts.
One of Sweetenham's main accusers, former British 100m and 200m breaststroke record-holder Jaime King, said she thought it was not as thorough as it should have been.
"If you are going to do an inquiry, things need to be done properly," said King, who claimed she was humiliated by Sweetenham at the 2003 World Championships.
King said Roberts had failed to interview her in person and said she ended up making her comments in an e-mail.
"In my mind I had him coming down to see me and doing it formally rather than doing it haphazardly over the internet," she said.
But Sparkes rejected King's claims, praising Roberts for the professional, detailed and open way he handled his investigation.
"He received representation by e-mail, by phone and by letter from a number of people who contributed to his investigation," said Sparkes.
I just think some of his ways are wrong and the way he treats people sometimes is wrong
Jaime King
"I can only assume in the case of Jaime King that he looked at what she had put in her e-mail and felt he got enough from that.
"I know that he sent her a copy of the submission he was going to put in the report and invited her to add to it or subtract from it."
King said she would accept the outcome of the inquiry but felt she had achieved her objective of opening up Sweetenham to scrutiny.
She also conceded that Sweetenham had "done a lot of good" for British swimming but reaffirmed her belief that he did not always handle his swimmers the right way.
"I just think some of his ways are wrong and the way he treats people sometimes is wrong," she said.
Sweetenham vigorously defended himself at the time the inquiry was launched but later said he had come close to resigning.
"I've been coaching for 30 years - males, females, all levels - and I've never had a problem," he said.
"All of a sudden now, because I set high standards and try to move British swimming on, I'm a bully. I've never been a bully."
Australian coach Bill Sweetenham has been cleared by an independent inquiry of bullying allegations made last year by former British table tennis player Matthew Syed. Syed had accused Sweetenham of damaging British swimming and causing the retirement of 13 senior British swimmers.

Sweetenham has been the performance director for British swimming since November 2000, when he took over from Deryk Snelling. His contract, which was recently renewed, runs up till the 2008 Olympics in Beijing, China.

Syed's claims had been denied by Sweetenham, British Swimming and many of the swimmers involved. Despite this and the result of the inquiry some of the swimmers maintain that the inquiry was not thorough enough.

The inquiry will be published later in the month when Sweetenham returns from Australia.