The former Alaska governor introduced the term last July when she used it in a Tweet about the proposed Islamic Cultural Center near the World Trade Center site in New York City.
"Ground Zero Mosque supporters: doesn't it stab you in the heart, as it does ours throughout the heartland? Peaceful Muslims, pls refudiate," she posted on her Twitter account, CBS News reported.
The word, believed to be a mixture of "refute" and "repudiate", was also named the number four top words of 2010 by the Global Language Monitor.
"Refudiate" triumphed over other words including "retweet", "vuvuzela", "bankster", a name for an evil banker, and "Gleek", a name for a fan of the TV show "Glee", the Sydney Morning Herald and AAP reported.
Palin defended her usage of "refudiate" in another Tweet: "'Refudiate', 'misunderestimate', 'wee-wee'd up', English is a living language. Shakespeare liked to coin new words too. Got to celebrate it!"
In an announcement made on the Oxford University Press blog, editors said the entry would read: "Refudiate: verb used loosely to mean 'reject': she called on them to refudiate the proposal to build a mosque".
The dictionary's editors said the terms was the "unquestionable buzzword of 2010".
Other words on the shortlist were "webisode" - an original episode derived from a television series, made for online viewing, "Tea Party" and "nom nom" - an expression of delight when eating.
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