The abrupt cutoff cast a cloud of uncertainty over pending adoptions in the Southeast Asian country, which have surged in the face of tightened restrictions in China, Guatemala and elsewhere.
The announcement came days after The Associated Press published details of a U.S. Embassy report that outlined rampant abuses, including hospitals selling infants whose mothers could not pay their bills, brokers scouring villages for babies and a grandmother who gave away her grandchild without telling the child's mother.
"It is tragic for children that the U.S. government has not been able to find ways to work with the Vietnamese government to prevent adoption abuses while at the same time processing legitimate adoptions," said Tom Atwood, president of the Washington-based National Council for Adoption, a research and advocacy organization.
"Many hundreds, perhaps thousands, of children will not have families as a result of this failure of leadership."
U.S. adoptions have boomed in Vietnam, with Americans - including actress Angelina Jolie - adopting more than 1,200 Vietnamese children over the 18 months ending in March. In 2007, adoptions quadrupled from a year earlier.
In its nine-page report, the U.S. Embassy said some American adoption agencies paid orphanage officials as much as $10,000 per referral, while others took them on shopping sprees and junkets to the United States in return for a flow of babies.
It said questions arose after routine investigations turned up widespread inconsistencies in adoption paperwork. There was also a suspicious surge in the number of babies listed as abandoned, making it impossible to confirm the children were genuine orphans or that their parents had knowingly put them up for adoption, as required by U.S. law.
Vu Duc Long, director of Vietnam's International Adoption Agency, called the U.S. allegations "groundless." On Monday, he said Vietnam was scrapping a bilateral agreement with the United States that sought to regulate the adoption system.
"They (the Americans) can say whatever they want, but we are not going to renew it," Long said.
In a letter to the U.S. Embassy in Hanoi, Vietnam said it would stop taking adoption applications from American families after July 1, but would continue to process applications of families matched with babies before that. Adoption arrangements with other countries were unaffected.
The U.S. Embassy said it respected Hanoi's decision, but was confident of the accuracy of the report.
"The government of Vietnam has made their own decision, but we believe that our report speaks for itself," said spokeswoman Angela Aggeler.
It was not immediately clear how many U.S. couples were affected by the decision.
Linda Brownlee, executive director of a Washington-based international adoption agency, said it was a bitter blow for 20 families on its waiting list who will not be able to be matched with children in time.
"Now their dossiers will be returned to them," said Brownlee of The Adoption Center, one of more than 40 U.S. agencies that arrange adoptions of Vietnamese children.
She said the embassy report did not cover positive aspects of adoptions in the country.
"They didn't say how many visas they had approved with no problem," she said. "I know many agencies who have done great work there and that doesn't get reported."
Keith Wallace, CEO of Families Thru International Adoption, agreed. "The (abuse) cases reported by the embassy ... are such a very small fraction" of U.S. adoptions in Vietnam, he said. "It is wrong to imply that Vietnamese adoptions are corrupt through and though."
Vietnam suspended all adoptions with foreign countries in 2003 over concerns about corruption. U.S. adoptions resumed in 2005 under a bilateral agreement intended to ensure they were above board. It was due for renewal on Sept. 1.
Vietnam is only the latest country where U.S. adoptions have been halted or severely restricted.
Suspected fraud and other irregularities have cast a cloud over the nearly 3,000 pending U.S. adoptions from Guatemala, the second-largest source of U.S. adopted children after China. Under State Department pressure, Guatemala is allowing those to go through, but would-be parents were warned last year not to initiate new adoptions.
By contrast, adoptions from Ethiopia are on the increase, growing 71 percent to 1,255 last year. "Ethiopia has become a country where, because of the transparency of the system, many are adopting," said Wallace.
In the Ethiopian capital, Addis Ababa, American adoptive parents have become a common sight in the city's hotels.
On Monday, J.B. Sikes, of Anselmo, Neb., cradled his newly adopted son Binyam.
"It was my desire that my family represent what the Kingdom of God looks like, and that's all different colors," the 39-year-old corn farmer said.
Adopting in Ethiopia, which cost about $30,000, was less expensive and restrictive than in the United States, said Sikes, who has two other biological children.
"We started out wanting to adopt domestically, but we found we were the last one on everyone's list, because we have other children," he said.
