U.S. Secretary of State Hillary Clinton has signed off on the release of $1.3 billion in annual military aid to Egypt, despite concerns that it is not making sufficient democratic reforms.

U.S. State Department spokeswoman Victoria Nuland said in a statement that Clinton decided to waive legislative requirements on Egypt's democratic transition based on U.S. national security interests. The statement says the decision reflects the “significant progress” Egypt has made in the last year and U.S. support for Egypt as a key player in regional stability.

In December, Congress passed a law requiring that Egypt's military rulers support the transition to a civilian government, hold free and fair elections, and protect freedom of religion and association before military aid could be released.

A U.S. official, who choose to remain unidentified, said earlier an additional $200 million in economic aid would be freed up because Egypt is meeting its obligation to the Israeli-Egypt peace treaty.

Many U.S. lawmakers and rights groups are expressing disappointment with the decision, saying Egypt's transitional military leaders have not demonstrated they are committed to making full democratic reforms.

Some lawmakers in Washington threatened to withhold military aid to Cairo following a December crackdown on several pro-democracy groups, including three U.S.-supported non-governmental organizations, as part of an investigation into illegal foreign funding.

Nuland also said Friday the U.S. remains “deeply concerned” and is urging an end to harassment of NGOs and activists, who she says play a key role in democracy building.

One of those organizations, the Washington-based Freedom House, said releasing military aid despite human rights concerns undermines U.S. efforts to support democracy in Egypt. In a statement Thursday, the group said Egypt's military rulers have “repeatedly failed to uphold the fundamental rights of Egyptian citizens.”

Many activists are also concerned about Egypt's continued trying of civilians in military courts and failure to fully repeal the country's harsh Mubarak-era emergency law.

Since last year's uprising that ousted longtime leader Hosni Mubarak, Egypt has made a series of reforms, including holding parliamentary elections and transferring legislative power to its people's assembly.