The European Union has said it will continue to provide aid to Egypt, but will cut military ties with the country.
The decision was made following emergency talks held in Brussels and the EUs earlier condemnation of the ongoing violence in Egypt.
At least 900 people have been killed since the military cleared the pro-Mursi camps in Cairo.
European council ministers have stated that the level of force used by the Egyptian security forces against Muslim Brotherhood supporters was disproportionate.
The EU also condemned the murder of policemen in Sinai, the destruction of churches and the targeting of the Coptic Christian community carried out by suspected Islamist militant groups.
Specifically, the union has suspended export licenses to Egypt of any weapons and goods that could be used for internal repression.
However it will maintain aid packages in an effort to prevent the most vulnerable groups in Egypt suffering from the impact of the ongoing instability.
The council also reiterated earlier calls for the revival of inclusive talks and the scheduling of future elections.
The EU pledged nearly 5bn in aid to Egypt in November 2012. The aid came in the form of grants and loans and was in addition to existing traditional financial support from the European Commission.
The US is still in talks about the future of its aid and military packages to Egypt.
Gulf States are also set to provide billions of dollars of aid to Egypt. Saudi Arabia has been particularly vocal in its support for Egypt, criticising the possible retraction of EU and US aid. Foreign minister Prince Saud al-Faisal said Saudi was ready to offer a helping hand to Egypt and supports the interim governments crackdown on acts of terrorism.
In the event the US does retract some funding, Saudi funding is likely to fill the financing gap.
Saudi money will suffice in the short term, says Anthony Skinner, head of Middle East and North Africa at UK-based risk consultancy firm Maplecroft.
It is also likely that Saudi Arabia and the UAE are willing to keep pumping petrodollars into Egypts economy, so long as their interests are served, he says.