Mr Markle, a reclusive 73 year-old lighting director, told TMZ he had suffered a heart attack last week but checked himself out of hospital so he could attend the wedding.
But on the weekend the Mail on Sunday published CCTV footage that it said showed Mr Markle had â€śsecretly collaborated with a British paparazzi photographerâ€ť to stage a series of photos sold to newspapers around the world.
The photos had portrayed him looking up online stories about his daughter in an internet cafĂ© in Mexico, apparently unaware he was being photographed.
They were published in many newspapers including the Mail Online and The Sun, and it is estimated they would have raked in around $US100,000 for the photo agency.
The CCTV footage showed Mr Markle arriving at the cafĂ© with the photographer and staging the photographs.
The MoS claimed other photos the same photographer took with Mr Markle had also been staged, including his being measured for a wedding suit, browsing a book of British landmarks and working out with weights.
It is common for paparazzi to take apparently candid shots with the co-operation of their subjects â€“ and this is common knowledge in tabloid newspapers.
But the paper claimed this revelation would cause â€śhuge embarrassment to the royal familyâ€ť because of Harryâ€™s troubled history with the paparazzi.
On Monday evening Kensington Palace issued a statement apparently confirming Mr Markle will not be attending.
It saidÂ â€śThis is a deeply personal moment for Ms. Markle in the days before her wedding. She and Prince Harry ask again for understanding and respect to be extended to Mr. Markle in this difficult situation.â€ť
Royal watchers are already speculating that Meghan’s mother will step in and walk her down the aisle instead – she had been due to spend the night before the wedding with her and travel with her to Windsor Castle. Other options include the couple abandoning tradition and walking in together, or Prince Charles stepping in to do the honours, or Meghan could make a feminist statement by walking in unaccompanied.
TMZ said Mr Markle told them the paparazzi agency approached him and offered him money â€“ though less than the reported $US100,000 â€“ and he â€śfigured there was no harm in it and it would help recast his imageâ€ť.
In prior photographs he has been portrayed buying beer and looking dishevelled.
Mr Markle told TMZ the new photos looked â€śstupid and hammyâ€ť and he â€śdeeply regretsâ€ť going along with the plan.
Meghanâ€™s half-sister Samantha Markle â€“ who reportedly was not invited to the wedding – said on her private Twitter account that the bad press over her father doing staged photos â€śis my faultâ€ť.
â€śThe media was unfairly making him look bad so I suggested he do positive photos for his benefit and the benefit of the royal family,â€ť she said.
â€śWe had no idea he would be taken advantage of. It was not for money.â€ť
Samantha Markle told ITV she didnâ€™t believe he had been paid â€śand if he was it was a pittanceâ€ť though â€śI can understand itâ€™s awkward for Kensington Palaceâ€ť.
Her older brother Thomas Markle Jr told The Mirror his father was embarrassed and would likely apologise to the royal family.
But the UK Telegraph reported Kensington Palace had offered Mr Markle support and would â€ścontinue to make interventions with the media out of concern for his safety and securityâ€ť due to the number of photographers chasing him for a picture and interview.
On Monday the Palace reported that Harry and Meghan will stay at separate hotels in the Windsor area the night before their wedding â€“ Harry with his best man, Prince William, and Meghan with her mother.
There was no mention of plans for Meghanâ€™s father.
Nick Miller is Europe correspondent for The Sydney Morning Herald and The Age