The US is withholding some $800m in military assistance to Pakistan in a show of displeasure over its cutback on US trainers, limits on visas for US personnel and other bilateral irritants.
White House Chief of Staff William Daley has said that Pakistani authorities have 'taken some steps that have given us reason to pause on some of the aid which we're giving to the military,'
As a result, 'we'll hold back some of the money that the American taxpayers have committed to give,' he said, adding this amounted to about $800m, or more than a third of the $2bn given to Pakistan for security assistance.
A look at the fraught relationship between Pakistan and the US
The US Defence Department said Pakistan's army had requested a 'significant cutback' of US military trainers and limited the ability of US personnel to obtain visas.
'While the Pakistani military leadership tells us this is a temporary step, the reduced presence of our trainers and other personnel means we can't deliver the assistance that requires training and support to be effective,' the department said in a written response to questions.
Bilateral ties have been under mounting strain as the US has pushed one of its key counterterrorism partners to boost efforts against Taliban and other militants fighting western forces in neighbouring Afghanistan.
Pakistan is also smarting from the surprise US raid that killed al-Qaeda leader Osama bin Laden on 2 May in a Pakistani garrison town, as well as US drone attacks and night raids that have killed civilians as well as militants.
The New York Times, which reported the aid curtailment in its Sunday editions, has said that Pakistan has shut down a US programme that had been training paramilitary forces, sending home more than 100 US trainers in recent weeks, and has threatened to close the base the CIA has been using for pilotless plane attacks on militant targets.
The US-Pakistan relationship was also damaged last year after a CIA contractor in Lahore killed two Pakistanis he said were trying to rob him.