The United States is suspending the handover of hundreds of millions of dollars worth of aid and support to Egypt's military.
The US government said it was "recalibrating" its $1.3bn (£0.8bn) annual aid to Egypt, putting on hold the delivery of large military systems and withholding some of its cash assistance.
"Large-scale military systems and cash assistance to the government," would be frozen, a spokesman said, "pending credible progress toward an inclusive, democratically elected civilian government through free and fair elections."
In recent weeks the country has been hit by intensifying violence, which follows the toppling of elected president Mohamed Morsi.
Hundreds have been killed during demonstrations, the vast majority of whom were supporters of Morsi.
The move by the US raises expectations that the Obama administration will describe Morsi's ousting as a coup.
Under US law it is illegal to fund a regime that has taken power as a result of a military coup.
Many have claimed the overthrow of Morsi was a coup because it appeared to have taken place with the support of Egypt's powerful military.
It also involved the removal of a democratically elected leader, and his replacement with a non-elected ruler whose appointment was announced by the military.
Egypt's military has been funded with aid since the Camp David Accord in 1978, which was seen as a crucial move in the promotion of peace in the Middle East.
The amount it receives is second only to the amount received by Israel, which was also a signatory to the accord.
Egypt uses much of its aid to order US-made defence equipment such as Apache helicopters and F-16 warplanes.
The spokesman did not say exactly how much of the aid would be suspended, but among the shipments delayed would be one for a number of MA-1 Abrams tanks and Apache attack helicopters placed on order four years ago.
Egypt will still receive crucial spare parts for certain military equipment and training for the country's armed forces will continue, officials said.
The US will also continue to provide aid that helps "secure Egypt's borders" and bolsters "counterterrorism" and "security in the Sinai."
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