The youngster withdraws himself from Stuart Pearce's side for the summer tournament and will be replaced by Nathan Redmond following a breach of betting regulations
The 21-year-old was due to link up with Stuart Pearce's side in Israel for the eight-team tournament but has excused himself from the squad following the charge.
A statement on the FA's official website read: "Townsend has withdrawn himself from the squad after the FA announced charges against him in relation to alleged betting offences.
"Townsend will receive the full support of the FA and Tottenham Hotspur in seeking rehabilitation whilst responding to the allegations.
"The player has until June 3 to respond to the charges."
Birmingham City youngster Nathan Redmond has been called up to the squad as Townsend's replacement, while Southampton left-back Luke Shaw has been forced to withdraw because of injury.