The United States has imposed sanctions against Thailand in response to the military coup which ousted civilian Prime Minister Thaksin Shinawatra.
Troops remain highly visible on Bangkok's streets
The move involves cutting off $24m (£12.8m) in military assistance, according to the US state department.
The US has urged the ruling generals to call elections as soon as possible.
Last week's coup has been widely welcomed in Thailand, but it has been condemned by most Western governments as a step backwards.
State department spokesman Sean McCormack said the aid cut involved military education and training, peacekeeping operations and counter-terrorism.
Funding for humanitarian purposes would however continue, he said.
"The United States continues to urge a rapid return to democratic rule and early elections in Thailand," said Mr McCormack, adding that funds would be reinstated once an elected government was in office.
Thailand's military rulers said on Thursday they had selected a new prime minister who would serve until the promised elections in October 2007.
But they did not reveal their choice and they refused to say when they would lift martial law and pull troops off the streets.
Thailand is a key US diplomatic and non-Nato ally and has played an important role in the US "war on terror" following the 11 September 2001 attacks.
Hambali, the alleged operations chief of South East Asian militant group Jemaah Islamiah, was arrested in Thailand in 2003.
The coup was staged on 19 September while the prime minister was in New York, attending the UN General Assembly.
The military overthrow followed months of growing tension in Thailand, with protests against Mr Thaksin and a general election which was annulled because of concerns about its legitimacy.