Reports of corruption in Afghanistan have led a US house panel to block $3.9 billion in aid that the Obama administration had sought.
The US House of Representatives subcommittee chairwoman, Nita Lowey, said the aid could be reconsidered once the panel holds hearings to review Kabul's actions to fight corruption.
Military operations funded through a separate bill would not be affected by the House panel's move, nor would humanitarian aid.
The House is slated to vote as early as Thursday on legislation to finance a $33 billion military aid request by Barack Obama, the US president, which would pay for the extra 30,000 troops he wants in Afghanistan.
Nita Lowey also wrote to the US government auditors asking them to audit all US aid to Afghanistan from the last three years.
The panel vote came on the same day Eric Holder, the US attorney general, met Hamid Karzai, the Afghan President, in Kabul to discuss efforts to tackle corruption.
Holder applauded steps taken so far but said "much work remains to be done."
Al Jazeera's Zeina Khodr reporting from Kabul, said: "They won't have enough money to continue development projects and that is really crucial in Obama's war strategy, which is not only a question of clearing territory from the Taliban like Petreaus said, it's also about coming in and providing better services to the people."
'Corruption being fought'
Al Jazeera's correpsondent said: "Afghan officials agree that there is corruption in the government but what they dispute with the international community is the extent of that corruption. They say that the way foreign companies award contracts should also be investigated.
"An official from the ministry of finance told Al Jazeera that in the past four years, $20 billion was given in aid to Afghanistan. But less than four billion of that amount was spent through the Afghan government channel and the rest was spent by the international community," she said.
Najib Manalai, a spokesman for the Afghan government, told Al Jazeera that the corruption issue is being blown out of proportion.
"We don't say that there is no corruption in the Afghan government. What we say is that the corruption in Afghanistan is not at that level, at the amounts that we are talking about," Manalai said on Thursday.
"There is corruption in Afghanistan, that's a fact. And the Afghan government is fighting against this ... but these corruptions are meaningless if you relate it to the corruption that exists in the international community."
Manalai said the majority of international aid money goes directly to foreign agencies, including security contractors, and called on behalf of the Afghan government for a joint investigation into the corruption issue, "so that all the people from Afghanistan and all the people from the aiding countries know who is stealing their money".
Mark Pyman, a defence project leader at Transparency International, said: "Our experience is helping with training of senior Afghan security and defence officials on ways of preventing corruption, and our experience is actually that they are very energetic, very ready and very engaged on this topic.
"Conflict and war are the handmaidens of corruption to quote a famous politician, Patty Ashdown from the UK, when you have these environments, corruption increases dramatically. Unless you were very attentive to the problem, it gets embedded and thereafter in a post-conflict environment, you have huge difficulties trying to eradicate the problem," he said.
The US House panel's blocking of Obama's aid request came hours after the US Senate unanimously voted to confirm David Petraeus as commander of international forces in Afghanistan.
The general was unanimously approved for the post after being nominated by the US president as a replacement for the departing commander General Stanley McChrystal.
Petraeus will take control of the mission after his predecessor was stripped of command over disparaging remarks he made about the Obama administration that were published in Rolling Stone magazine.
McChrystal announced his retirementfrom the US armed forces on Tuesday, after a 34-year career.
Earlier on Wednesday, the Taliban launched an attack on a Nato military basein Jalalabad to "send a message to David Petraeus."
The US later announced that more than 100 soldiers were killed in the month of June, making it the bloodiest month for foreign forcessince the US-led invasion in the autumn of 2001.
Petraeus is expected to confer with Nato members in Brussels on Thursday before heading to Afghanistan, where he could assume command as early as Sunday.
Nato allies have supported Obama's pick.
Liam Fox, Britain's defence secretary, on a visit to Washington, called Petraeus a "gifted leader". But he also said allied nations should prepare war-weary publics for a spike in casualties.
He warned Nato nations against prematurely withdrawing forces, saying this risked sparking civil war, destabilising Afghanistan and its nuclear armed neighbor Pakistan.
Three US allies, Canada, the Netherlands and Poland, have announced plans to withdraw combat forces from Afghanistan.