The United States ambassador to Eritrea has confirmed that Eritrea has asked the US international aid agency, USAid, to cease operations in the country.
UN envoy Marti Ahtisaari (r) has asked Eritrea to release UN vehicles
"The government has told us they are uncomfortable with the activities of USAid," Ambassador Scott DeLisi said.
Two-thirds of Eritrea's 3.6m people rely on food aid. Relations with donors have been under strain for some time.
The government has impounded about 120 aid agency vehicles, and some aid was recently blocked over tax demands.
Rumours about USAid stopping work surfaced last month, but the ambassador's announcement was the first time they had been confirmed.
Relations between Eritrea and the US have become strained in recent years.
Mr DeLisi said the decision was partly to avoid precipitating problems.
"We will be here as long as the government of Eritrea wants us to be here. We will respect the government's choices," he said.
A government proclamation made in May requires international NGOs to register annually, have a minimum $2m at their disposal in Eritrea, and to pay tax on aid imports, including food aid.
Earlier this month the government backed down over a tax row which blocked imports of food aid at the port of Massawa.
The government says the proclamation guarantees the rights and transparency of NGOs.
Earlier this week, United Nations envoy Martti Ahtisaari appealed to the Eritrean authorities to release some 120 vehicles confiscated from the UN and other aid organisations.
Eritrean officials say the vehicles were confiscated to try to pool resources and increase efficiency.
Correspondents say that Eritrea has prized self-reliance since winning independence from Ethiopia 12 years ago.
It has tried to hold international aid agencies at arm's length but it has failed to avoid dependency on foreign aid.
The government has not yet explained why it wants USAid to leave.