The U.S. has been considering such a move since the Egyptian military ousted the country's first democratically elected leader in July. It would be a dramatic shift for the Obama administration, which has declined to label President Mohamed Morsi's ouster a coup and has argued that it is in U.S. national security interests to keep aid flowing. It would also likely have profound implications for decades of close U.S.-Egyptian ties that have served as a bulwark of security and stability in the Middle East.
The move follows a particularly violent weekend in Egypt, as dozens of people were killed in clashes between security forces and Morsi supporters.
The U.S. officials spoke on condition of anonymity because they were not authorized to discuss the matter publicly before the administration's official announcement.
President Barack Obama's top national security aides recommended the aid cutoff in late August, and Obama had been expected to announce it last month. But the announcement got sidetracked by the debate over whether to launch military strikes against Syria.
The U.S. provides Egypt with $1.5 billion a year in aid, $1.3 billion of which is military assistance. The rest is economic assistance. Some of it goes to the government and some to other groups. Only the money that goes to the government would be suspended.
Egypt has other allies who may be able to fill the financial void.
Saudi Arabia and some of its Gulf Arab partners have been a critical financial lifeline for Egypt's new government, pledging at least $12 billion so far and aiding in regional crackdowns on Morsi's Muslim Brotherhood. On Monday, Egypt's interim president, Adly Mansour, visited Saudi Arabia on his first foreign trip in a sign of the importance of the Gulf aid and political backing.
The planned cutoff of U.S. aid also underscored the strategic shifts under way in the region as U.S. allies in the Gulf forge ahead with policies at odds with Washington. Saudi Arabia and other Gulf states, including the United Arab Emirates and Qatar, are strong backers of Syrian rebel factions and were openly dismayed when the U.S. set aside possible military strikes against Bashar Assad's government. The Gulf states also feel increasingly sidelined as Washington reaches out to their rival, Iran.
Iran had moved quickly to heal long-strained ties with Egypt following Morsi's election, but now has to redirect its policies with Egyptian leaders who don't share Tehran's agenda.
Meanwhile, an Egyptian court on Wednesday announced that Morsi will go on trial on Nov. 4 on charges of incitement to the killing of opponents while he was in office. Morsi was removed in a popularly-backed coup on July 3 and has been held incommunicado at an unknown location and has not been seen since, though he has spoken to his family twice and was visited by EU's foreign policy chief, Catherine Ashton, and an African Union delegation.
According to Wednesday's court decision, the 62-year old Morsi will be tried before a criminal court for allegedly inciting his supporters to kill at least 10 people, use violence and unlawfully detain and torture anti-Morsi protesters.
Officials told The Associated Press in September that the recommendation involving U.S. aid to Egypt called for a significant amount to be withheld. Those officials spoke on condition of anonymity because they were not authorized to publicly discuss internal deliberations. The money could be restored once a democratically elected government is returned.
While the exact amount to be suspended was up to the president, the principals recommended it include all foreign military financing to Egypt's army except for money that supports security in the increasingly volatile Sinai Peninsula and along Egypt's border with the Gaza Strip, U.S. officials said. Counterterrorism funding may also continue.
Assistance that is used to pay American companies that sell Egypt military equipment would be suspended if Obama accepts the recommendation, but those firms would be compensated with so-called "wind-up" payments that could amount to hundreds of millions of dollars, according to the officials.
On Tuesday, National Security Council spokeswoman Caitlin Hayden denied reports that the U.S. was halting all military assistance to Egypt. "We will announce the future of our assistance relationship with Egypt in the coming days, but as the president made clear at (the United Nations General Assembly), that assistance relationship will continue," Hayden said.
At the U.N. Obama said the U.S. will continue to support Egypt in areas such as education. But he said the U.S. has held up the delivery of certain military aid, and said future support "will depend upon Egypt's progress in pursuing a democratic path."
In Cairo, Egypt's military chief Gen. Abdel-Fattah el-Sissi described Egypt's relations with the United States as "strategic" and founded on mutual interests, but cautioned that his country would not tolerate pressure, "whether through actions or hints."
In excerpts from an interview published Wednesday by the Cairo daily Al-Masry al-Youm, el-Sissi - who led the coup that ousted Morsi - offered his own interpretation of where the Obama administration stands.
"We need to be clear here and say they (the U.S.) are keen on continuing the aid and that it is not cut off," he said. "They are trying to take measures that conform with the spirit of the law and deal with what happened in Egypt as the outcome of popular will."
Any suspension of U.S. assistance to Egypt would follow months of internal deliberation over how to respond to Morsi's ouster, during which the administration has struggled to enunciate a coherent policy.
The administration determined it was not in the U.S. national interest to determine whether a coup had taken place, as such a designation would have required it to suspend all but humanitarian assistance to Egypt. It did delay the delivery of some fighter planes, but as Egypt's military began a heavy-handed crackdown on Morsi supporters - despite U.S. appeals for restraint - the president's advisers started to consider more muscular action. Obama then cancelled a joint military exercise and announced a new review of assistance.
Associated Press writers Brian Murphy in Dubai, United Arab Emirates, and Hamza Hendawi in Cairo contributed to this report.