Palmer angered Caracas after he said he believed Venezuela's army was suffering from low morale [AFP]
The US has revoked the visa for Venezuela's ambassador to Washington in what it called a "reciprocal" action for Caracas turning down the US choice for its own representative in the Venezuelan capital.
Mark Toner, a US state department spokesman, confirmed on Wednesday that the visa of ambassador Bernardo Alvarez Herrera, who is reportedly not currently in the US, had been revoked.
Toner said: "We said there would be consequences when the Venezuelan government rescinded agreement regarding our nominee, Larry Palmer.
"We have taken appropriate, proportional and reciprocal action".
Speaking on state television on Tuesday, Hugo Chavez, the Venezuelan preisdent, had dared the US to cut off diplomatic relations.
"If the [US] government wants to expel our ambassador there, let them! If they cut off diplomatic relations, let them," he said.
Chavez had announced in August that he would not accept Palmer's appointment to be the next US ambassador to Venezuela because of comments Palmer made during his confirmation hearing in the senate.
Palmer said that he believed Venezuela was allowing leftists FARC fighters to find safe haven in the country and that Venezuela's military was under Cuban influence and suffering from low morale.
Relations between Washington and Caracas have been rocky since Chavez came to power in 1999.
Both sides withdrew their ambassadors between September 2008 and June 2009 after a spat over US military bases in Colombia.
Despite their political differences, the US continues to buy around one million barrels of crude oil from Venezuela every day.