During his state visit to India early next month, Obama was scheduled to tour the Golden Temple in Amritsar -- Sikhism's holiest shrine -- where he would be required to cover his head in line with the religion's practices.
But aides feared images of him with a traditional scarf over his head could be used by opponents in the United States to portray him as a closet Muslim.
"He will not be going to Amritsar now," a diplomatic official in New Delhi, who declined to be named, told AFP. "The headscarf is one issue and there were other logistical issues that led to the cancellation."
The Indian foreign ministry said Obama's tour of the Golden Temple had been prepared by an advance team of US diplomats.
"We provided them with all the support and guidance they needed but now it is for US officials to decide whether Obama should go to the temple or not," an official at the ministry told AFP.
Sikhs in Amritsar, in India's northern state of Punjab, expressed disappointment.
"We do expect people to cover their heads. Obama is welcome inside the temple. He could just wear a cap," said Gurubachan Singh, a senior official from the Golden Temple management trust.
Normally caps are not permitted in the temple as the action of tying a piece of cloth around the head is important to Sikhs, whose menfolk are required to have turbans and beards.
Most tourists use simple squares of cloth sold outside the temple.
Obama, a Christian whose middle name is Hussein, continues to face accusations from US right-wingers that he is actually a Muslim. In a Time magazine poll in August, 24 percent of respondents wrongly said he is a Muslim.
Sikhs were subject to hate crimes in the United States after the September 11, 2001 attacks from assailants who mistook them for Muslims. One Sikh garage owner in Arizona was shot dead by a man who thought he was an Arab.
Obama's Indian itinerary has yet to be officially announced but he is thought likely to visit Mumbai and then the capital New Delhi during a three-day visit.
"We have not yet released the final schedule for the president's trip to Asia, including India," a White House official said on condition of anonymity.
"India is a vast and extraordinary country, and there are many more events that the president would like to do than he will have time for during a three-day visit."
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