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The Trump administration has notified the Congress that it has given $255 million worth of conditional military assistance to Pakistan that the country can access only if it takes more action against terror groups.
The announcement comes over a week after President Donald Trump hit out at Pakistan for providing safe havens to terror groups that kill Americans in Afghanistan. He also warned Pakistan that it has "much to lose" by harbouring terrorists.
The Trump administration notified the Congress on Wednesday that it was putting $255 million in military assistance to Pakistan into the equivalent of an escrow account that Islamabad can only access if it does more to crack down on internal terror networks launching attacks on neighbouring Afghanistan, The New York Times reported.
An escrow account is an account of conditional deposition where the funds are kept blocked until the pre-agreed conditions are met.
The move comes, at a time when the relationship between the two countries have strained.
Pakistan has cancelled at least three high profile meetings with senior American officials, including a visit of Pakistan Foreign Minister Khawaja Asif to the US to meet Secretary of State Rex Tillerson.
Pakistan National Assembly passed a resolution alleging that the recent statements of the US President and his senior officials on Pakistan were hostile and threatening.
The US, however, insists that it wants Pakistan to take action against terrorist groups.
According to the report, State Department officials have said Trump's promised changes will bring "explicit" conditions on military aid.
"Once Pakistan more aggressively pursues the Taliban and Haqqani network, the aid will be released -- a determination to be made by Secretary of State Tillerson," officials were quoted by the report as saying.
The $255 million in military assistance was the largest portion of $1.1 billion in aid authorised by the Congress in 2016 that also included money for counter narcotics operations and health initiatives, the daily reported.
The US has provided Pakistan more than $33 billion in aid since 2002.
"If the State Department had failed to notify the Congress in the next few weeks of its intention to spend the money, it would have been returned to the United States Treasury," it said.
Early in the day, the State Department said it wants Pakistan take decisive action against terrorist groups and safe havens.
"We value our cooperation with Pakistan and want to see it continue," a State Department spokesperson said.
"The president has been clear that we are looking to the Pakistani government to take decisive action against militant groups based in Pakistan that are a threat to the region. It is vital to US interests that Pakistan prevent terrorist sanctuaries," the spokesperson said.
After Trump's policy announcement last week, there has been sharp reaction from Pakistan, which has accused the US of making unjustified allegations against it.