Bush's security team wanted more than 230 guests to pass through a metal detector. Chilean officials, including President Ricardo Lagos, said such a measure would be humiliating for guests that would include world leaders.
Instead of a large formal dinner Bush will attend a smaller affair in the Chilean president's private dining room.
Security matters took the spotlight during the weekend Asian-Pacific Economic Cooperation summit, a meeting of 21 nations that border the Pacific Ocean, when Bush personally broke up a Saturday night melee between a Secret Service agent and a Chilean security detail.
A Chilean security officer tried to prevent the Secret Service agent from accompanying Bush to the official dinner of the APEC summit on Saturday
"You're not stopping me! You're not stopping me!" yelled the agent, as taped by several television cameras. "I'm with the president."
A shoving match ensued in which Bush interjected himself, pulling the agent away from the fracas.
White House officials attempted to downplay the incident saying it wouldn't harm U.S.-Chilean relations.