Afghanistan President Hamid Karzai has called for NATO-led forces to move out of Afghan villages and remote areas after a US soldier shot dead 16 civilians.
The soldier accused of the shooting was flown out of Afghanistan to an undisclosed location in Kuwait.
The commander of US and Afghan forces in Afghanistan, General John Allen, made the decision based on a legal recommendation, a US official said.
Meanwhile, the Afghanistan Taliban has announced the suspension of all talks with the US.
It also said it considers peace talks with the Afghan government to be "pointless" and said the main obstacle was the "shaky, erratic and vague standpoint of the Americans".
Tensions have risen sharply across Afghanistan since the attack and the inadvertent burning of copies of the Koran at the main NATO base last month.
US Defence Secretary Leon Panetta, in Kabul on a two-day visit to try to soothe Afghan anger, discussed the massacre with President Hamid Karzai and faced demands from the Afghan leader that any trial be transparent.
"I assured him first and foremost that I shared his regrets about what took place. I again pledged to him that we are proceeding with a full investigation here and that we will bring the individual involved to justice. He accepted that," Mr Panetta told reporters.
An Afghan man who was injured as he drove a pickup truck on a runway ramp as an aircraft carrying Mr Panetta landed at an Afghan base yesterday has died from burns suffered in the incident.
The Afghan, a translator, had apparently tried to ram the truck into a group of marines standing on the ramp at Camp Bastion in Helmand province.