Less than a week after its launch the 5800, Nokia’s first all touch-screen phone, has been withdrawn after users complained that it had problems accessing 3G networks.
Other uses have also found that the earphones supplied were not sealed properly and were taking in moisture from the ear and failing.
Nokia is due to release the same phone in Australia on March 20.
In a statement Nokia said the issue was "a very isolated problem concerning only the North American market and is not specific to any other region or country."
"Nokia is investigating the issue. Existing customers of the 5800 XpressMusic who experience 3G signal issue with the device are advised to contact Nokia Customer Care."
Users are reporting that while they can connect to AT&T’s GSM (2G) and EDGE networks 3G connections are proving more difficult.
The company has also said that the faulty earpiece problem has been fxed and a new supplier found and that and handset bought after January 2009 should not suffer from these problems.
The move will be severely embarrassing for Nokia, which is looking to challenge the popularity of Apple’s iPhone in the US market.
The company was once the market leader in North America but is now languishing in fifth place, behind Samsung, Motorola, LG and RIM.
