US Secretary of State Rex Tillerson will now step in for the launch of the new embassy site, which will open to staff on January 16.
Trump was embroiled in a public spat with British Prime Minister Theresa May late previous year after he retweeted three anti-Muslim videos from far-right group Britain First.
The move, which ended a 200-year US association with London's Grosvenor Square, was part of American efforts to secure diplomatic staff in compounds - a push tied to terror concerns after al-Qaida bombings at two USA embassies in East Africa a decade ago.
There was an outburst on social media after the visit was announced a year ago, when protesters vowed to turn out in great numbers to let the US President know that he was not welcome in the UK. "Wanted me to cut ribbon-NO!"More news: Wahlberg's pay 1500 times more than Williams'
London Mayor Sadiq Khan, who has feuded with Trump on numerous ocassions, said, "President Trump has used Twitter to promote a vile, extremist group that exists exclusively to sow division and hatred in our country". Philadelphia-based architects KieranTimberlake won the tender to design the new building, according to the United States embassy website.
The US embassy is moving from Grosvernor Square in Westminster to the Nine Elms area of Wandsworth.
The controversy sparked a diplomatic spat between Theresa May and Mr Trump, after Mrs May condemned the US President's actions.
The cancellation came amid fears of protests during Trump's visit.
Earlier, British media reported that Trump was cancelling his visit to Great Britain scheduled for next month amid concerns over mass protests when arrives in London.
Mrs. May had been placed in an awkward situation, as Mr. Trump's unpopularity in Britain prompted calls that she stand up to the president or even call off his visit.