The US military is to stop sending $300 million worth of aid to Pakistan.
The Pentagon says the move comes after alleging Islamabad has failed to take action against militant groups.
The US state department has criticised Pakistan, a key ally, for failing to deal with terrorist networks operating on its soil, including the Afghan Taliban and the Haqqani network.
The decision needs approval from US Congress before it can be confirmed.
The announcement comes just days before US Secretary of State Mike Pompeo is due to visit Pakistan to meet the country's new prime minister, Imran Khan.