Officials said that some military aid will be cut, but not all of it. The announcement comes after the July coup against President Mohamed Morsi and the ongoing turmoil surrounding the power struggle.
Initial reports said that the U.S. would cut all of its aid to Egypt, but the Obama administration has denied those claims.
"The reports that we are halting all military assistance to Egypt are false," National Security Council spokeswoman Caitlin Hayden said.
"We will announce the future of our assistance relationship with Egypt in the coming days, but as the president made clear at UNGA [the United Nations General Assembly meeting in New York], that assistance relationship will continue."
Funds to uphold Egypt's obligations under its peace treaty with Israel are likely to continue, as well as money for counterterrorism and security in the Sinai, where extremists have set up base.
The Obama administration withheld some military aid to Egypt in August. More than $1 billion is given each year in military support to Egypt, and the move to suspend assistance has been prompted by an "accumulation of events."
The U.S. has not yet notified Egyptians of the decision, and the specifics of the announcement are expected to be made Wednesday. The announcement has already been pushed back several times.
"We will announce the future of our assistance relationship with Egypt in the coming days, but as the president made clear at UNGA, that assistance relationship will continue," Hayden said.
Restoration of the funds will be considered should Egypt make what the U.S. determines to be positive steps to restore democracy.
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