Despite the president publicly blaming predecessor Barack Obama, the USA embassy said the plan to finance the project was developed in 2007, at a time when George W Bush was in the White House.
"Many Londoners have made it clear that Donald Trump is not welcome here while he is pursuing such a divisive agenda", London Mayor Sadiq Khan, who has often exchanged barbs with Trump on social media, tweeted.
Kahn even questioned Britain's Prime Minister Theresa May's urgency to extend an invitation of a state visit to Trump in the first place.
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.
While Trump had claimed that he called off the visit because he didn't want to open the new US embassy in south London and termed the decision to move the building from Mayfair to Vauxhall as a "bad deal".
In 2009, the Obama State Department agreed to sell the Grosvenor Square building where the USA embassy was located to the Qatar royal family.
But the American presence has not been appreciated by the embassy's neighbors in recent years.
Donald Trump cancels February visit to UK
The US embassy in London said its move to a new location has been completed within budget - just hours after Donald Trump described it as a "bad deal". May proclaimed the strength of the "most special relationship" between the two countries and the government extended an invitation for a state visit as a guest of Queen Elizabeth II.
The idea had gradually evolved into a working visit in which Trump would open the London embassy. In December, Ambassador Woody Johnson said he was looking forward to welcoming the president when he visited, adding: "I think he will be very impressed with this building and the people who occupy it".
Trump tweeted overnight that he would not attend the ceremony, initially scheduled for next month. She suggested a formal visit could still, but offered no details.
In the meantime, the relationship between May and Trump has come under strain.
But British officials have been dismayed by some of Trump's pronouncements, particularly a proposed ban on Muslims entering the United States and most recently when Trump rebuked May on Twitter after she criticized him for retweeting British far-right anti-Islam videos. "And we thought: 'Wouldn't it be fun [to move] our own President Trump there, instead?'"
However, Mayor of London Sadiq Khan - who has clashed with the president in the past - said the USA president had "got the message" that many Londoners were staunchly opposed to his policies and actions.
"His visit next month would, without doubt, have been met by mass peaceful protests", the mayor added. "It seems he's finally got that message", Khan tweeted. But Foreign Secretary Boris Johnson blamed Khan and Labour Party leader Jeremy Corbyn for discouraging the US leader from coming.