Devyani Khobragade was arrested and strip-searched in New York last December while serving as India's deputy consul-general on charges of mistreating her servant.
She had denied the charge and subsequently returned to India, but the incident triggered fury in New Delhi and led to the resignation of then US ambassador Nancy Powell.
Reports on Saturday said Khobragade has been removed from her current post in the foreign ministry for an unauthorised media interview and for not disclosing that her children held US passports.
"The reports are not incorrect. It is true that she has been placed on compulsory wait," a source in the ministry told AFP on condition of anonymity, adding that Khobragade now faces an administrative inquiry.
Compulsory wait implies that Khobragade remains in ministerial service but without a specific job.
The action comes a week after the mother-of-two spoke to NDTV news channel about her arrest and strip search in New York.
During the interview, Khobragade said that her "kids were born in the US and are considered US citizens", a statement that reportedly took the ministry by surprise.
Khobragade returned to India under a deal a month after her December 2013 arrest for allegedly paying a domestic worker a fraction of the minimum wage and for lying about the employee's salary in a visa application.
The row between the two countries saw weeks of feisty exchanges that strained bilateral ties and left resentment on both sides.
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My parents moved our family to a Western country about 64 years ago, and one is always reading or hearing about dreadful Muslims, Hindu extremists, greedy Jews, recalcitrant blacks ETC. Now many of these things may be true, but my experience in 64 years is that I have only been taken advantage of financially, or physically threatened, by Anglo-Saxons. I would suggest that although diplomat Devyani Khobragade did the wrong thing she was too gullible to work out the legal conman tricks which pervade the US from the White-House down to the lower echelons of US society. Remember, the world has been taken advantage of by Anglo-Saxons for several hundred years. Although it is no excuse, Indians are merely amateurs compared to Anglo-Saxons, although of course they are learning rapidly in order to survive, particularly at the corporate level. .
@Raj - USA: Apart from her strange name what is it that she has done which is objectionable in the USA? She under paid her house maid similar to what Macdonald practices with foreign students and with the administration support, besides claiming American nationality for her children is no different than somewhat dubious claim of the current President of the USA. Who knows that one day the Khobragade may become the President of the USA. Indians should be proud of the erratic lady.
Rex Minor
I am happy that people who have compromised on their moral values are paying a price. She does not deserve our support.
It is OK for Americans to go around the world shooting people in the back as in Lahore, but do not underpay your staff in New York if you are Indian. Of course, most of the millions of American people in the lower levels are not being underpaid are they?.
I have supported US taking action on her but not the way it did. She should have been punished but not strip searched or arrested in public. She is a corrupt person with no moral values and it is good that she got what she deserved. It is an opportunity for India to send a professional and capable diplomat to fill her place.
Same old indian stories, nothing new even after 60 plus independence years. She will be given some post in movie industry or her story will next inline to make real life movie etc etc
Obviously she is not fit for a position of responsibility in the Indian Foreign Ministry.