President Donald Trump has previously accused Pakistan of deceiving the US while receiving billions of dollars.
Pentagon spokesman Lt Col Koné Faulkner said the US military would aim to spend the money on other “urgent priorities”.
The move, which needs to be approved by US Congress, is part of a broader suspension announced in January.
On Saturday, a spokesperson for the Pentagon said that “due to a lack of decisive actions in support of the South Asia strategy, the remaining $300m was reprogrammed”, withdrawing for good a previous offer to unfreeze the funds if Pakistan took decisive action against militant groups.
“We continue to press Pakistan to indiscriminately target all terrorist groups,” Faulkner said, adding that the latest aid cut request was pending Congressional approval.
The announcement came days before US Secretary of State Mike Pompeo is scheduled to visit Islamabad to meet new Prime Minister Imran Khan.
Experts on the Afghan conflict, America’s longest war, argue that militant safe havens in Pakistan have allowed Taliban-linked insurgents in Afghanistan a place to plot deadly strikes and regroup after ground offensives.