Last night British officials said the visit was canned for "personal reasons" after a series of perceived slights.
"It appears that President Trump got the message from the many Londoners who love and admire America and Americans but find his policies and actions the polar opposite of our city's values of inclusion, diversity and tolerance", Khan said in a statement.
Reason I canceled my trip to London is that I am not a big fan of the Obama Administration having sold perhaps the best located and finest embassy in London for "peanuts", only to build a new one in an off location for 1.2 billion dollars.
"Bad deal", Trump said, adding "wanted me to cut ribbon - NO!"
The US President had been expected to visit the new £750m ($1bn) home for American diplomats on the banks of the River Thames as early as next month.
The old building had "aged beyond its ability" to be improved to meet security and safety standards without a major infrastructure investment, the embassy said in a statement.
After Trump declared his disapproval with London's new USA embassy as the reason for cancelling his visit to the city, Madame Tussauds placed a waxwork of the President outside the building, CNN reported.
As an American living in London, however, I was embarrassed: not, for once, because of the behaviour of my president, but for my British hosts.
The White House said it will announce details "soon" of Trump's proposed visit to the UK.
In Washington, White House spokeswoman Sarah Huckabee Sanders said Trump's comment was exclusively about an embassy-related visit.
Relations between the USA and its closest ally have been tested repeatedly since Trump took office nearly a year ago.
MPs have repeatedly called for the offer of a state visit for the US President to be withdrawn following his crackdown on immigration from majority-Muslim countries and promotion of far-right group Britain First on Twitter.
On the embassy web page about the project, it said: "The project has been funded entirely by the proceeds of the sale of other US Government properties in London, not through appropriated funds". "He's scared at the hundreds of thousands of people that will be here, peacefully protesting against his visit because of his racist and his misogynistic views", said Labour MP Marsha de Cordova.
But Johnson accused Khan and Labour leader Jeremy Corbyn of damaging U.S. -Britain relations with their vocal criticism.
But the Foreign Secretary took to Twitter to condemn Mr Khan and his party leader, saying: "The US is the biggest single investor in the United Kingdom yet Khan & Corbyn seem determined to put this crucial relationship at risk". We will not allow US-UK relations to be endangered by some puffed up...