Washington faces a dilemma in dealing with Egypt, a major regional ally that controls the strategic Suez Canal and borders Israel but whose army overthrew the first freely elected president, Mohamed Mursi, after mass protests against his rule.
The US is to withhold deliveries of tanks, fighter aircraft, helicopters and missiles, as well as £160 million in cash aid, but left some other aid programmes intact.
Foreign Ministry spokesman Badr Abdel Atty said: "The decision was wrong. Egypt will not surrender to American pressure and is continuing its path towards democracy,"
The US decision was made pending progress on democracy and human rights but the State Department said it would continue military support for counter-terrorism, counter-proliferation and security in the Sinai Peninsula, which borders US ally Israel. It will also continue to provide funding in education and health.