A firestorm on the US right has erupted after the Guardian reported that Sarah Palin will be denied a meeting with Lady Thatcher on the grounds that it would be "belittling" for her to meet the darling of the Tea Party movement.

Rush Limbaugh, the conservative radio host, devoted the opening section of his radio show to denouncing the "preposterous" Guardian report, as Palin supporters accused Thatcher's circle of disgracing the former prime minister.

The US conservative right reacted furiously after the Guardian reported that Thatcher's aides had decided it would be inappropriate for her to meet Palin, who is planning to visit London next month en route to Sudan. Palin has been touring US historical sites (an excursion that saw her slip up this week on the subject of Paul Revere, the American patriot who made a famous "midnight ride" to warn of approaching British forces).

One Thatcher ally told the Guardian: "Lady Thatcher will not be seeing Sarah Palin. That would be belittling for Margaret. Sarah Palin is nuts."

The former prime minister's friends say she will show the level she punches at when she marks the centenary of the birth of Ronald Reagan by attending the unveiling of a statue of the late president outside the US embassy in Grosvenor Square on independence day, 4 July. The Thatcher ally added: "Margaret is focusing on Ronald Reagan and will attend the unveiling of the statue. That is her level."

The response from the US right was swift. Limbaugh opened his show on Wednesday with a lengthy denunciation of the Guardian after the New York Daily News and a host of US publications picked up on the comments.

"There's a story out there today, and it's an illustration of how things happen, how things are said and reported," Limbaugh told his listeners. "This is preposterous, and I have personal knowledge of this."

Limbaugh said he knew Thatcher well and embarked on a lengthy description of how he had driven her round a Florida golf course on a golf cart: "I have been with her in social and professional settings as well. It's obvious that her health is not today what it was, but back in the day, Margaret Thatcher would in no way allow an aide to refer to anybody, Sarah Palin notwithstanding, as 'nuts'."

La Donna Hale Curzon, the host of Sarah Palin Radio, accused the Thatcher circle of disgracing the former prime minister. "Margaret Thatcher would never call a fellow Conservative, let alone Gov Palin 'nuts'," Hale Curzon tweeted. "Thatcher's handlers have disgraced the Iron Lady."

The ally who criticised Palin said the Thatcher circle would not change their minds despite the backlash. "Margaret will not be meeting Sarah Palin. If necessary we will make sure that Margaret has an off day when Palin is in London."

Critics of Palin revelled in the backlash against Thatcher's circle, whose dismissive views of Palin undermine her claim that she is the victim of a witch-hunt by left-leaning mainstream media. Palin regards Thatcher as one of her heroines.

Andrew Sullivan, of The Dish blog, which chronicles Palin's weaknesses, wrote : "As usual, the tired old bigoted comedian Rush Limbaugh took offence that anyone could call Sarah Palin 'nuts,' even though she is quite obviously a few sandwiches short of a picnic, and her grip on reality is, shall we say, tenuous. And as usual, Limbaugh blamed it on the left, ie the Guardian's Wintour/Watt blog.

"What he doesn't understand is that Palin's nutsiness is not a partisan matter in Britain, or anywhere else in the world. It is an obvious truth marvelled at by all. Palin's emergence as a serious figure in American politics has made the country a laughing stock across the world. The idea that a stateswoman like Thatcher, in advanced dementia, would be used by such a crackpot is simply unseemly."