The White House is objecting that the House did not formally vote to begin the impeachment inquiry into Mr Trump, and is also attacking the conduct of House intelligence committee chairman Adam Schiff.
"Early this morning, the U.S. Department of State directed Ambassador Gordon Sondland not to appear today for his scheduled transcribed interview before the U.S. House of Representatives Joint Committee", the law firm representing Sondland said in a statement.
Sondland labored carefully with Kurt Volker, the USA particular envoy to Ukraine, to form US global coverage round Trump's need to analyze Joe Biden's son Hunter, who was on the board of a Ukrainian gasoline firm, in addition to an unsubstantiated idea that Ukraine had interfered within the 2016 presidential election to undermine Trump's candidacy.
Mr Schiff said Mr Sondland's no-show was "yet additional strong evidence" of obstruction of Congress by Mr Trump and Secretary of State Mike Pompeo that will only strengthen a possible impeachment case.
The decision to block Sondland from testifying heightens the conflict between the Trump administration and the House committees over the impeachment inquiry.
President Trump seemed to say he blocked Sondland from testifying in a tweet Tuesday, saying, "Unfortunately he would be testifying before a totally compromised kangaroo court, where Republican's rights have been taken away, and true facts are not allowed out for the public to see". He spoke to Trump in September as diplomats raised questions about why security aid to Ukraine was being withheld.
Sondland, 62, is one the diplomats involved in numerous text messages released by the committees last week that show discussions about Trump's July phone call with Zelensky, which was the subject of at least one whistle-blower report.
"This is one of the few impeachment inquiries in the history of our country", Schiff said. He said those communications had been provided to the Department of State, which was withholding them. He would have been the second current or former State Department to testify, following former USA special envoy to Ukraine Kurt Volker.
"He stands ready to testify on short notice, whenever he is permitted to appear", Sondland's lawyer, Robert Luskin, said in a statement.
Speaking to reporters Tuesday, Schiff laid out four parameters of the committee's investigation.
The White House has declared it will not co-operate with what it termed an "illegitimate" impeachment probe by House of Representative Democrats, setting up a constitutional clash between US President Donald Trump and Congress. Ohio Rep. Jim Jordan said Tuesday that Trump was simply "doing his job" to prevent corruption in Ukraine.
Hours later, Sondland, who had been aggressively pursuing a public settlement for Ukraine to launch the investigations, replied, "Bill, I believe you are incorrect about President Trump's intentions". In the messages, diplomat William Taylor expressed concern about Trump pressuring Zelensky for a Biden investigation.
In response, Giuliani said that he was "very interested" in Graham's invitation but that he would need "to review" matters of executive privilege and attorney-client privilege before committing to appear.
A key figure in the Ukraine scandal will not speak to Congress Tuesday as planned. In exchange, the American officials dangled the offer of a Washington meeting between Trump and Zelenskiy.
Some Republicans have cited Sondland's text messages as proof that Trump did nothing wrong. Yovanovitch was the US ambassador to Ukraine until Trump recalled her in May before her term was up, after the president's supporters questioned her loyalty.
Pelosi says a vote is not needed, although Democrats say the House would back the inquiry if there were a vote. If a majority of House members back impeachment, the matter shifts to a trial in the Senate, now controlled by Republicans.