Israel's fiery deputy foreign minister, Tzipi Hotovely, harshly criticised Wallstrom, calling her comments "a mix of blindness and political stupidity".
"Israel has decided to close its doors to official Swedish visits," she said in comments broadcast on Israeli public radio.
A foreign ministry spokesman later walked back her comments, saying they referred only to Wallstrom and not other Swedish officials. An adviser to Hotovely told AFP that diplomatic relations with Sweden would continue.
As the controversy erupted, a Swedish delegation including one of the country's deputy parliament speakers, Esabelle Dingizian, was visiting Israel.
Wallstrom made the comments on yesterday while responding to a question in parliament on a controversy raised in December by her statement on the need for Israel to avoid "extrajudicial executions".
A wave of Palestinian knife, gun and car-ramming attacks targeting Israelis erupted in October, and there have been allegations that Israel has responded with excessive force in some cases.
Twenty-three Israelis and an American have been killed in the attacks. At the same time, 150 Palestinians have been killed by Israeli forces, most while carrying out attacks.
Israel firmly rejects accusations that it has used excessive force.
Ties between Israel and Sweden plummeted after Stockholm recognised the Palestinian state shortly after Wallstrom's centre-left Social Democrats won a parliamentary election in 2014.
A day after the Paris attacks in November claimed by the Islamic State group, Wallstrom again attracted Israeli condemnation when she said the decades-old Israeli-Palestinian conflict was a factor in radicalisation.
An adviser to Hotovely told AFP today that Wallstrom would have no reason to visit Israel in any case because "with that sort of position we really don't have anything to talk about."
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