British Government sources said they had never officially been informed of a date for Mr Trump to make a visit, but speculation had suggested he would formally open the new £750m embassy at a ceremony in February.
"Bad deal", Trump said, adding "wanted me to cut ribbon - NO!"
President Donald Trump says he is canceling an upcoming trip to London because he doesn't like the Obama administration's choice of a new embassy there.
The State Department, however, announced plans for relocating the London embassy in 2008, while George W. Bush was still president, because of concerns about security following the September 11 terror attacks.
Image London's Mayor sat down and flicked through a paper when his speech was disrupted
While the embassy statement emphasised that the United States was able to erect a new building project through a property swap, without using taxpayer funds, Trump might have a point on the economics of selling the old embassy in London's tony Mayfair district. At the time, U.S. Ambassador Robert Tuttle said the decision to move to the five-acre site on the south side of the River Thames came after a "long and careful process".
Trump said he was abandoning next month's trip because he did not like the location and cost of the new embassy building.
"Vauxhall is a vibrant and important part of London and home to many businesses", May's spokesman Max Blain told reporters yesterday.
Theresa May offered Trump a full state visit, including a trip to meet the Queen at Buckingham Palace, after he was first elected.More news: Border Wall Must Be Part of DACA Deal
In addition, Ms May and Mr Trump fell out spectacularly in November over his retweeting of anti-Muslim videos posted online by the deputy leader of the far-right Britain First group, Jayda Fransen.
As a resident of Nine Elms in south London, just around the corner from the new American embassy, for strictly selfish reasons I welcomed the news that Donald Trump would not be coming to open it after all.
"Many Londoners have made it clear that Donald Trump is not welcome here while he is pursuing such a divisive agenda", Khan said on Friday.
"The invitation for a state visit has been extended and accepted", the official said.More news: Boeing Unveils New Unmanned Cargo Air Vehicle Prototype
But Foreign Secretary Boris Johnson suggested that the decision was prompted by opposition to Mr Trump in Britain, and warned that such critics "seem determined to put this crucial relationship at risk".
"His visit. would without doubt have been met by mass peaceful protests", Khan said.
"We will not allow US-UK relations to be endangered by some puffed-up, pompous popinjay in City Hall", Johnson tweeted. But Foreign Secretary Boris Johnson blamed Khan and Labour Party leader Jeremy Corbyn for discouraging the USA leader from coming.More news: Central Valley Man Held for Shooting Mother After Video Game Argument