The United States will retain its military ties with Egypt but more violence by the army could jeopardize the relationship, Defense Secretary Chuck Hagel told the country's military chief Thursday.

Hagel said he had called General Abdel Fattah al-Sisi, Egypt's defense minister and the central figure in the interim government, to express US concern after Wednesday's brutal crackdown on supporters of ousted president Mohamed Morsi.

"The Department of Defense will continue to maintain a military relationship with Egypt, but I made it clear that the violence and inadequate steps towards reconciliation are putting important elements of our longstanding defense cooperation at risk," Hagel said.

Hagel's warning follows an earlier announcement from President Barack Obama cancelling a joint exercise due to be held next month because of the Egyptian army's violent crackdown Wednesday that left hundreds of protesters dead.

"Since the recent crisis began, the United States has made it clear that the Egyptian government must refrain from violence, respect freedom of assembly, and move toward an inclusive political transition," Hagel said.

"Recent developments, including the violence that has resulted in hundreds of deaths across the country, have undermined those principles."

Due to the US military's decades-long ties with the Egyptian army, Hagel has become the Obama administration's main conduit for communicating with Cairo as the crisis has unfolded.

The Pentagon chief has had more than 15 phone conversations with Sisi since July 2, the day before the army's coup that removed president Morsi from power.

"In my discussion with Minister Al-Sisi, I reiterated that the United States remains ready to work with all parties to help achieve a peaceful, inclusive way forward," Hagel added.

Commentators, rights advocates and some lawmakers have criticized the Obama administration for not taking stronger action, urging completely cutting off aid to Cairo.

But Pentagon spokesman George Little insisted that calling off the exercise sent "a clear signal to Egyptian authorities that we're deeply concerned about recent events in the country."

Obama cancels US exercises with Egypt
Chilmark, United States / Massachusetts (AFP) Aug 15, 2013 - President Barack Obama said Thursday the United States has canceled military exercises with Egypt to protest the killing of hundreds of protesters.

Obama urged Egypt's army-installed authorities to lift a state of emergency and allow peaceful protests but stopped short of suspending $1.3 billion in annual military aid.

"While we want to sustain our relationship with Egypt, our traditional cooperation cannot continue as usual when civilians are being killed in the streets and rights are being rolled back," Obama told reporters at his vacation home on Martha's Vineyard.

Obama said the United States informed Egypt it was suspending the Bright Star exercises, which has been scheduled every two years since 1981.

More than 1,300 US troops took part in Bright Star in 2009, in which Germany, Kuwait and Pakistan also participated.

But the exercises were also called off in 2011 as Egypt was in the throes of the revolt that overthrew longtime strongman Hosni Mubarak, a close US ally.

Egypt has been in turmoil ever since, with the army on July 3 ousting the country's first democratically elected president, the Islamist Mohamed Morsi.

More than 500 people have died since Wednesday when Egyptian security forces, defying appeals for restraint by the United States and other powers, crushed pro-Morsi demonstrations.

The United States has carefully avoided calling Morsi's ouster a coup, a designation that would require the United States to cut assistance.

Obama said that Morsi was "not inclusive" and that "perhaps even a majority" of Egyptians opposed the Muslim Brotherhood leader.

"While we do not believe that force is the way to resolve political differences, after the military's intervention several weeks ago, there remained a chance for reconciliation and an opportunity to pursue a democratic path," Obama said.

"Instead, we've seen a more dangerous path taken through arbitrary arrests, a broad crackdown on Mr Morsi's associations and supporters, and now tragically violence that has taken the lives of hundreds of people," he said.

"We believe that the state of emergency should be lifted, the process of national reconciliation should begin, that all parties need to have a voice in Egypt's future," he said.

Obama ignored a shouted question from a reporter on US assistance.

Egypt has been one of the top recipients of US assistance, primarily aimed at the military, since the most populous Arab nation signed a historic peace treaty with US ally Israel in 1979.

Israel has supported the continuation of US military aid, seeing it as vital to preserving the peace treaty and ensuring Egypt's cooperation against Islamist hardliners. The US Senate on July 31 easily defeated an attempt to cut aid to Egypt over the coup.

Obama insisted that the United States had no favorite candidate in Egypt, where conspiracy theories are rife about US support for either side.

"America cannot determine the future of Egypt. That's a task for the Egyptian people," he said.

He said that the United States also had a long journey "to perfect our union," saying: "We know that democratic transitions are measured not in months or even years, but sometimes in generations."