UPDATE 1-Winehouse cancels Grammys, may appear on satellite

(Updates with possible Grammy appearance, other details, previous LONDON)

By Sue Zeidler

LOS ANGELES, Feb 7 (Reuters) - British soul singer Amy Winehouse's personal issues again derailed her career on Thursday as U.S. officials rejected her application for a visa, causing her to cancel plans to attend the Grammy awards.

The artist's label, Universal Music, and Grammy organizers were assembling a plan to have Winehouse perform via satellite at the top U.S. music awards being held in Los Angeles on Sunday, said a source close to the star.

While news of the visa rejection caught few by surprise due to the star's well-chronicled drug and legal issues, many called it unfortunate for Winehouse and the Grammys because the singer is among the most-nominated performers. Winehouse entered a rehab clinic last month for drug addiction.

"I think this is a first time a top contender for all of the top awards has been barred from attending. It's a tragic blow for her comeback," said Tom O'Neil, columnist for awards Web site Envelope.com.

Even with a beamed-in performance, Winehouse will not be shown on the red carpet or in the cutaway shots of the audience, which may underscore her absence.

"It could also be really embarrassing for the Grammys, if she sweeps the awards and she's not there," O'Neil said.

A spokesman for Winehouse, 24, said in a statement she had been progressing well since entering a rehabilitation clinic two weeks ago. "Although disappointed with the decision, (she) has accepted the ruling and will be concentrating on her recovery," the spokesman said.

SIX NODS, NO SHOW

Nominated for six Grammys, Winehouse is one of Britain's top artists, winning critical and commercial success with her album "Back to Black," which has sold nearly 5 million copies worldwide, including 1.3 million in the United States.

Winehouse will vie for best new artist and her tune "Rehab" was nominated for record and song of the year. "Back to Black" was nominated for best album of the year.

She is also one of four women vying for the title of best new artist, alongside Canadian singer-songwriter Feist, country singer-songwriter Taylor Swift, and R&B singer Ledisi. Also nominated were the female-fronted rock band Paramore.

Winehouse ranked second in Grammy nominations to rapper Kanye West.

With her career overshadowed by drug and alcohol problems, music industry experts had hoped a performance by the beehive-coiffed singer at the Grammys would boost her standing with U.S. audiences.

But many believe Winehouse's talent already has swayed many of the 12,000 music industry professionals who vote on the Grammys. "It's not like a political vote. Voters make their decisions on music and quality, not personal habits or character," said Jay Cooper, an entertainment lawyer.