The oil workers' unions NUPENG and PENGASSAN, whose 6-week-old strike has paralysed industry and transport in the country, quickly said they would continue their action.
"We are going to intensify the strike until Abiola and other political detainees are unconditionally released," Ken Narebor, the deputy general secretary of PENGASSAN, told Reuters.
Judge Mohammed Mustapha told a packed court: "It has been my desire to see that the accused gets unhindered justice. Now it is clear from all the utterances that they have no confidence in me.
"I wish to excuse myself from further hearing the case," Mustapha said before walking out of the stunned courtroom.
His withdrawal is bound to delay the trial as a new judge will have to be appointed.
Abiola, wearing a traditional white gown, waved as he entered the court. He embraced his wives, family and friends and laughed when the judge read out the charges of attempting to overthrow military ruler General Sani Abacha.
Security police later led him away.
There was no sign that the authorities were ready to drop charges against the multi-millionaire media magnate. Abiola is widely believed to have won last year's annulled presidential election. He proclaimed himself president in June, prompting his arrest which touched off strikes and riots.
"We were expecting a nolle prosequi," Nigeria Labor Congress president Pascal Bafyau told reporters, using the legal term for an application to discontinue the case.
"What has happened is a surprise to us, and the central working committee of the NLC will meet immediately to decide what will happen next," he added.
The congress, which called off a two-day general strike to negotiate Abiola's release, will be under pressure to resume the stoppage.
Strikes by oil workers which began July 4 have choked fuel deliveries in much of the country and reduced crude-oil exports, Nigeria's main source of hard currency.
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