Sinn Féin president Gerry Adams has called off a trip to the United States this week after he was told he would not be allowed to raise funds during the visit.
The US administration wanted Sinn Féin to make a "positive statement" about policing in the North before giving him fundraising permission, although he was granted a visa to promote the peace process.
Mr Adams denounced what he called an "amateurish attempt" by Washington to change Sinn Féin's policy on policing and said it was "absurd" that he should be prevented from attending a fundraising event that would go ahead regardless.
Mr Adams was due to receive the William J Flynn Initiative for Peace award at a National Committee for American Foreign Policy dinner in New York this evening and to meet politicians and officials in Washington tomorrow.
He was to be guest of honour at a $500-a-head Friends of Sinn Féin fundraising dinner in New York on Thursday.
US special envoy for Northern Ireland Mitchell Reiss said he was disappointed that Mr Adams had decided to cancel the visit.
"I very much regret that Mr Adams will not be visiting the United States this week. I look forward to continuing to work with him on all outstanding issues as we go forward," he said.
Mr Adams said: "I am personally disappointed in the position that Mitchell Reiss has adopted on this."
Mr Adams said that any Sinn Féin move on policing depends on action by the British government.
"If and when the British government honours commitments which it has made and which are in the public arena, I will honour commitments that I have made.
"We want to be part of a policing dispensation, but the British government has a bit of work to do before that can happen," he said.
Sinn Féin, which has not endorsed the Police Service of Northern Ireland (PSNI), is waiting for the British government to introduce legislation that would devolve authority over the PSNI to elected politicians in the North.
The party says that, until a power-sharing executive is restored, the new policing dispensation would be a matter "for joint delivery" by the British government and that of Ireland.
US officials fear it could be months, or even years, before Sinn Féin finally endorses the PSNI and that, in the meantime, Catholic areas in the North could fall prey to dissident republicans and criminal elements.
Some within the US administration favour banning Sinn Féin politicians from visiting the US at all until the party backs the PSNI.
Others are more flexible, emphasising that each visa application is dealt with individually and that Washington's policy adapts to changing political circumstances in the North.
Mr Adams said he will go ahead with a planned visit this weekend to Canada, which has placed no restrictions on fundraising.
A Friends of Sinn Féin fundraising dinner is due to take place in Toronto with Mr Adams in attendance.
The DUP's Ian Paisley jnr last night welcomed the US administration decision to bar Mr Adams from fundraising.
"This is a welcome and sensible decision from the United States administration. I would encourage them to continue to adopt a tough stance in their dealings with Sinn Féin/IRA and to ensure that Gerry Adams and his cohorts are unable to raise funds in the United States.
"Sinn Féin/IRA has yet to return the £26.5 million they stole from the Northern Bank and everyone knows that funds raised by them are used to further the goal of terror, fear and criminality," he said.