A State Department official says the U.S. is set to release $1.3 billion in annual military aid to Egypt, despite concerns that it is not making sufficient democratic reforms.

The official, who declined to be identified, says Secretary of State Hillary Clinton will announce Friday that Washington has decided to waive a legislative requirement making military assistance to Egypt conditional on certain democratic benchmarks.

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.

The official said Thursday that condition was now being waived “on the basis of America's national security interests.” He also said 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.

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.

But 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.

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.