Boris Johnson, who wants the UK to leave the EU, says the "part-Kenyan" US leader may have an ancestral dislike of Britain. He was quickly accused of "dog-whistle racism."
In a column for "The Sun" tabloid on Friday to mark Obama's visit to the UK, Johnson claimed a bust of the British war time leader Winston Churchill had been removed from the White House on the day Obama's administration moved into the building in 2009.
Johnson, a former journalist and regular newspaper columnist, recently published a biography of Churchill. He questioned whether the return of the statue to the British embassy in Washington had been a snub to Britain.
"Some said it was symbol of the part-Kenyan President's ancestral dislike of the British empire - of which Churchill had been a such a fervent defender," wrote Johnson, who is one of several Conservative MPs campaigning for Britain to quit the 28-member bloc.
Obama's late father was from Kenya, a former British colony that gained independence in the 1960s.
Johnson went on to counter the US President's call for British voters to choose to remain within the EU, when they vote in a referendum on June 23.
He also told Obama that the UK and America could "be better friends than ever ... if we leave the EU."
But the London Mayor's comments were immediately rounded upon and he was asked to withdraw them.
"Mask slips again. Boris' part-Kenyan Obama comment is yet another example of dog whistle racism from senior Tories [Conservatives]," said shadow chancellor John McDonnell, who represents the opposition Labour party in parliament.
Other opposition MPs told "The Guardian" newspaper that Johnson had displayed "bad judgment" and his comments were "beyond the pale."
Churchill's grandson Nicholas Soames - who is an MP for Britain's ruling Conservatives - also described Johnson's comments "appalling."
Meanwhile British Prime Minister David Cameron's spokeswoman urged the American-born London Mayor to "focus on facts."
British and American officials have since refuted the claims, saying the Churchill bust remains in the White House.
In an op-ed published in the "Telegraph" newspaper at the start of his three-day visit to Britain, Obama supported Britain's EU membership, saying the challenges in the world required allies to "stick together." He added that the UK's presence in the EU "magnifies" Britain's influence and helps spread "British values."
Obama's column was lambasted by pro-Brexit campaigner and the head of the UK Independence Party, Nigel Farage, who called on Obama to "butt out" of the debate.
On Friday, Obama arrived at Windsor Castle for a royal lunch with Queen Elizabeth II, a day after her 90th birthday.
Later on Friday, he was due to have dinner with Prince William, his wife Kate and brother Prince Harry at Kensington Palace in London.
The US president also met with Prime Minister David Cameron in between the royal engagements. This weekend, Obama travels on to Hanover, to attend Germany's largest annual trade fair.