US Secretary of State Hillary Clinton will open the way on Friday to resuming $1.3bn in annual military aid to Egypt despite fears it is slipping in its avowed transition to democracy.
Clinton notified Congress of her plans in a further easing of the crisis in the 30-year-old US-Egyptian alliance caused by a three-month crackdown on pro-democracy groups by Egypt's interim military rulers.
"Tomorrow, Secretary Clinton will certify that Egypt is meeting its obligations under its peace treaty with Israel," a senior State Department official said in an email on Thursday.
The certification will clear the way for $250m in economic aid, which had not been in serious question.
The top US diplomat will also waive legislative requirements on whether Cairo is making progress towards democracy to allow for "the continued flow of foreign military financing to Egypt," the official said on condition of anonymity.
The move will free up $1.3bn in military aid this year.
The official stressed that "on the democracy side, Egypt had made more progress in 16 months than in the last 60 years," highlighting free and fair parliamentary elections as well as the transfer of legislative authority to the new people's assembly.
"Yet Egypt's transition to democracy is not yet complete, and more work remains to protect universal rights and freedoms, and the role of NGOs and civil society," the official added.
Annual military aid, which has underpinned US ties to Cairo for three decades and cemented Egypt's 1979 peace treaty with Israel, was put on hold over a crackdown on non-government organisations (NGOs).
But US officials said it was in the US interest to maintain military and economic aid.
"These decisions reflect our overarching goal: to maintain our strategic partnership with an Egypt made stronger and more stable by a successful transition to democracy," the State Department official added.
In December, Cairo prosecutors stormed the offices of the US-funded International Republican Institute, the National Democratic Institute and Freedom House as part of a probe into allegations of illegal foreign funding.
They were among 17 offices of Egyptian and international NGOs raided as part of what analysts saw as a wider drive by the military leaders to silence dissent after criticism of its human rights record.
In January, Egypt then barred some US members of the NGOs from leaving the country and a number of them took refuge at the US embassy.
Tensions between Cairo and Washington eased this month when Egypt allowed six US citizens and seven other foreign NGO members to leave the country after they posted bail.
But the trial of 43 defendants in the case, 16 Egyptians and 27 foreign nationals, is set to resume on April 10.
Patrick Leahy, the Democratic senator who sponsored the legislation that tied conditions to aid, said he was "disappointed" by Clinton's decision.
"I know Secretary Clinton wants the democratic transition in Egypt to succeed, but by waiving the conditions we send a contradictory message," Leahy said in a statement.
"The Egyptian military should be defending fundamental freedoms and the rule of law, not harassing and arresting those who are working for democracy," he said.
Now that she has taken her decision, he said, Clinton should release funds in increments as Egypt demonstrates its commitment toward democracy following the revolution that overthrew former president Hosni Mubarak in February last year.
The military aid goes toward paying US military and security contractors who supply equipment and services, including training, to the Egyptian armed forces.