Secretary of State Antony Blinken has said China's decision to fly an apparent spy balloon over the US is "unacceptable and irresponsible".
The top American diplomat has abruptly cancelled a trip to Beijing, which would have been the first high level US-China meeting there in years.
China earlier expressed regret, saying it was a weather airship that had been blown astray into American airspace.
The incident comes amid fraying tensions between the US and China.
Later on Friday the Pentagon said a second Chinese spy balloon had been spotted - this time over Latin America.
"We are seeing reports of a balloon transiting Latin America. We now assess it is another Chinese surveillance balloon," said Pentagon press secretary Brig Gen Patrick Ryder. He provided no further details about the balloon's location.
Mr Blinken described the Chinese balloon over the US as "a violation of our sovereignty".
"This is an unacceptable as well as an irresponsible action," he said. "It's even more irresponsible coming on the eve of a long-planned visit."
America's top diplomat was set to visit Beijing from 5 to 6 February to hold talks on a wide range of issues, including security, Taiwan and Covid-19.
But on Thursday US defence officials announced they were tracking a high-altitude surveillance balloon over the United States.
While the balloon was, the Pentagon said, "travelling at an altitude well above commercial air traffic" and did "not present a military or physical threat to people on the ground", its presence sparked outrage.
On Friday, China finally acknowledged the balloon was its property, saying that it was a civilian airship used for meteorological research, which deviated from its route because of bad weather.
A statement from China's Foreign Ministry said that it regretted the incident and would work with the US to resolve the issue.
However, the state department official said that while the US acknowledged China's claim about the balloon's purpose, it stood by the assessment that it was being used for surveillance.
Another trip by Mr Blinken to China would be planned "at the earliest opportunity", another senior state department official said, adding that Washington planned to maintain "open lines of communication" about the incident.
The official added that the state department had informed close US allies about the violation of US airspace.
In a statement, a spokesperson for Global Affairs Canada - the country's foreign ministry - said that it had summoned China's ambassador over the incident and would "vigorously express" its position to Chinese officials.
A White House spokesperson said that US President Joe Biden agreed with Mr Blinken that it was "not appropriate" to go to China at this time.
Mr Biden did not take questions about the balloon following remarks about the US economy on Friday morning.
According to US officials, the aircraft flew over Alaska and Canada before appearing in the US state of Montana, which is home to a number of sensitive nuclear missile sites.
By Friday morning, the balloon was moving east "over the centre of the continental US" at an altitude of about 60,000ft (18,200m) according to Air Force Brigadier General Pat Ryder.
Kansas Senator Roger Marshall said on Twitter that the balloon was over the north-eastern part of his state early on Friday afternoon.
Gen Ryder added that US officials are monitoring the object and reviewing "options". He said the balloon - which he described as "manoeuvrable" - posed no military or physical threat to people on the ground.
Although fighter planes were alerted, the US decided not to shoot the object down due to the dangers of falling debris, officials said.
The Democratic president's political opponents demanded tough action against China.
Several Republican lawmakers - as well as former President Donald Trump - have urged the US to down the alleged spy craft.
"Shoot down the balloon," Mr Trump said in a short message on his Truth Social social media platform.
On Twitter, House Speaker Kevin McCarthy said that the balloon incident was "a destabilizing action that must be addressed".
The Biden administration must now contend with China "hawks" on both sides of the political spectrum.
Montana Democratic Senator Jon Tester said in a statement that he was "still waiting on real answers".
Speaking to CBS, a US official described the payload of the balloon - the attached part from which the alleged surveillance is carried out - as being as large as two or three school buses. The balloon itself is significantly larger.
Chinese officials have previously publicly expressed interest in the potential military and intelligence-gathering potential of balloons.
"Technological advances have opened a new door for the use of balloons," an article in the military-run Liberation Army Daily said last year.
In 2022, Taiwan's defence ministry said it had detected Chinese balloons over its territory.