United States President Donald Trump said he has cancelled his trip to London because of a "bad deal" over the relocation of the American embassy.

Mr Trump had been expected to travel to the British capital next month to open the embassy, which will move from Grosvenor Square to Nine Elms.

He took to Twitter to explain why he called off the visit, which had sparked fears of mass protests and would have been his first to the United Kingdom as President.

"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," Mr Trump said.

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However, the embassy website showed the decision to move the location was made in 2008 under George W Bush, months before Barack Obama took office in January 2009.

It would have been impossible to retrofit the aging concrete building with the security measures needed, officials said at the time.

The new US embassy in south London will open to the public on January 16. ( Supplied: US Embassy & Consulates in the United Kingdom )

There was an outburst on social media after the visit was announced last year, when protesters vowed to turn out in great numbers to let the US President know that he was not welcome in the UK.

Calls for British Prime Minister Theresa May to cancel his visit amped up again in late November when Mr Trump retweeted anti-Muslim videos shared by a British far-right group.

Downing Street condemned the tweets, but rejected calls from opposition MPs to revoke Mr Trump's invitation.

London Mayor Sadiq Khan — who has been criticised by Mr Trump in tweets — said the US President appeared to have "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".

"His visit … would without doubt have been met by mass peaceful protests," Mr Khan said.

The British Government said the opening of the embassy was a matter for the United States, but Foreign Secretary Boris Johnson blamed Mr Khan and Labour Party leader Jeremy Corbyn for discouraging the US leader from coming.

"The US is the biggest single investor in the UK — yet Khan & Corbyn seem determined to put this crucial relationship at risk," Mr Johnson said in a tweet.

"We will not allow US-UK relations to be endangered by some puffed up pompous popinjay in City Hall."

The US will leave behind an imposing 1960 stone and concrete embassy in London's upmarket Grosvenor Square — an area known as 'Little America' during World War II, when the square also housed the military headquarters of General Dwight D Eisenhower.

When the deal was made in 2008, the US Government said their "goal of a modern, secure and environmentally sustainable embassy could best be met by constructing a new facility".

The new embassy on the South Bank is a veritable fortress set back at least 30 metres from surrounding buildings — mostly newly-erected high-rise residential blocks — and incorporates living quarters for the US Marines permanently stationed inside.

The $US1 billion construction, overlooking the River Thames, was wholly funded by the sale of other properties in London.

ABC/Reuters