Two sources, who could not speak on the record because the status of security clearances is classified, confirmed US media reports that the 37-year-old White House aide had lost access to America's most closely protected secrets.
The White House, including the president himself, refused to comment on the record, but insisted that the decision would not have any impact on Kushner's role.
Still, Kushner's loss of access to "Top Secret/Sensitive Compartmented Information" casts serious doubt on his ability to be a powerbroker inside the White House and to negotiate Middle East peace.
Politico and CNN first reported that his clearance may have been rescinded late last week.
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Kushner -- who is married to the president's daughter Ivanka Trump -- has been a leading figure in efforts to reach a peace deal between Israelis and Palestinians.
He has also been a strong proponent of Washington's intensified support for the government of embattled Israeli Prime Minister Benjamin Netanyahu.
The decision comes just days before Netanyahu visits the White House.
Former US negotiator Aaron David Miller said Kushner now risks losing "credibility" with interlocutors in the Middle East.
Kushner's lawyer had earlier admitted that he has not yet completed the formal clearance procedures, despite reportedly getting access to the most secret material contained in the president's daily briefing -- the crown jewels of US intelligence.
White House Chief of Staff John Kelly ordered changes to the clearance system after a top aide Rob Porter worked for months without full clearance because of allegations he abused both his former wives.
"I will not comment on anybody's specific security clearance," Kelly said in a statement.
"Everyone in the White House is grateful for these valuable contributions to furthering the President's agenda. There is no truth to any suggestion otherwise," Kelly said.
Ivanka Trump's security clearance level has also been in question.
She recently visited South Korea and briefed that country's president Moon Jae-in on new North Korea sanctions.