GENEVA, June 1 (Reuters) - The International Labour Organization has rescinded the appointment of a top U.S. official to be deputy head of the UN agency because of delays in payments from the United States, it said on Monday.

"Sheng Li (United States of America) will therefore not assume the position of Deputy Director-General in July as previously foreseen," it said in a statement to Reuters.

The U.S. Department of Labor did not immediately respond to Reuters' request for comment. 

Sheng Li was appointed to the role by the ILO in April after months of delays. However, the ILO has since told the U.S. that the appointment will not go ahead unless it pays its dues.

"This decision is without prejudice to the possibility of the United States settling its arrears and thereby regaining its position as the largest contributor in assessed contributions," the ILO said. 

The cash-strapped organisation has already frozen hiring and non-essential travel for staff, and is considering reforms to relocate some staff to lower-cost countries. The ILO is yet to set out how the cuts will affect its operations in the longer-term.

Three diplomats told Reuters that Washington is being asked to pay at least $50 million of the contributions it owes, casting new uncertainty on the agency's fragile financial situation and potential job cuts. 

The U.S. usually holds the deputy role as the biggest donor, paying 22% of the ILO budget.

As of May 29, the U.S. owes 257 million Swiss francs ($328 million) in total for 2026 and previous arrears from 2024 and 2025, according to figures on the Geneva-based agency's website. 

"The DG has said 'You need to pay by this date'," a diplomat said, describing it as an ultimatum. The ILO told Reuters that it did not issue an ultimatum. 

"We are faced with enormous uncertainty," said a staff member. If by September members states do not pay their arrears, including the U.S., the organisation faces a liquidity gap of 27 million francs meaning the ILO will launch emergency measures and by January 120 positions could be cut, they added.  

The ILO said it would give an update on its financial situation at a meeting in mid-June.

Li was appointed to the role in April after a former senior White House economic official, Nels Nordquist, withdrew.