An Iranian man accused of murdering another immigration detainee at a WA detention centre has had the charge dropped because of the death of a key witness.

Mohammad Al Lami, 31, was alleged to have fatally stabbed a 32-year-old Turkish man during a fight in a compound at the Yongah Hill detention centre east of Perth in June 2022.

The incident led to a disturbance and smoke was seen billowing from some accommodation units before emergency services, including the riot squad, arrived to bring the situation under control.

Video provided to the ABC showed the victim being carried out on a stretcher as CPR was performed on him.

He was rushed to Northam hospital but could not be saved.

At the time, refugee advocates said the victim had been held at Yongah Hill for about three years, but that he had signed a "return to Turkey" document about a year before.

Mr Al Lami was charged with his murder about a week later and was tranferred to prison where he has remained today.

Mr Al Lami had pleaded not guilty, and a provisional Supreme Court trial had been scheduled for February next year, but today WA's Office of the Director of Public Prosecutions discontinued the charge.

Prosecution lawyer Sean Stocks said because of the death of a witness, who was in the room at the time of the alleged murder, there were no longer any reasonable prospects of conviction.

Mr Stocks told the court he had considered reading the witness's statement to the trial, but he said it was considered that any application for that to happen was "doomed to fail" because of the unfairness to the accused "in the peculiar circumstances of the case".

Justice Joseph McGrath then told Mr Al Lami he would be released from custody after being processed.

While Mr Al Lami no longer faces any criminal charges, it is likely he will be returned to immigration detention.