UPDATED 7.24pm GMT: The US Embassy insists that the project will still go ahead, using funds from the sale of existing properties.
The new budget deal prohibits additional funding being provided for the project. But the US Embassy in London insists that it will still be able to cover the cost of its new building through the sale of existing property in the British capital.
The US spent a decade searching for a site for its new £600m embassy in London. But now – with construction underway – Congress is about to pull funding for the project, according to a detail contained in the latest bipartisan budget deal.
The decision could also affect Boris Johnson's plan to extend the London Underground to Battersea.
When the US committed to the Nine Elms site it helped spur regeneration and the creation of a new enterprise zone that will service £750m of debt associated with Boris Johnson's flagship plan to extend the Northern Line to the area.
Transport for London documents state that the the "first major contributor" to the enterprise zone "is expected to be the US Embassy".