Aids campaigners have welcomed a decision by Brazil to turn down US funds because of a clause in the agreement condemning prostitution.
Campaigners say Brazil's programme is working
The US development agency, USAid, had offered Brazil around $40m (£21m).
But Brazil's top Aids official, Pedro Chequer, said the US' conservative approach to treating the disease would not help.
Correspondents say references to prostitution are likely to become a condition for all US Aids funding.
Washington says it is important not to promote prostitution, and does not want any of its funds to be spent on treating prostitutes.
US President George Bush has allocated $15bn to the worldwide fight against Aids.
Much of the spending is being channelled to programmes that advocate abstinence, rather than condom use, and cannot be used for abortions or to treat prostitutes.
But Aids activists in Brazil said the clause would hamper the treatment of infected sex workers and their clients.
Mr Chequer also called for official recognition of prostitution as a profession in Brazil.
Sex workers should have the right to collect state welfare payments like other workers, he said.
"That clause shows disrespect for sex workers. We advocate the legalisation of the profession, with the right to collect INSS [social security] and a pension," said Mr Chequer.
Sonia Correa, an Aids activist in Brazil, said accepting the US conditions would have set back a Brazilian programme that was successfully bringing down the infection rate.
"The US is doing the same in other countries - bullying, pushing and forcing - but not every country has the possibility to say no," she said, quoted in Britain's Guardian newspaper.