A total of $800 million in aid and equipment could be either suspended or outright cancelled, according to three unnamed US officials quoted by the newspaper on Saturday.
Pakistan currently receives more than $2bn in military aid from the US every year.
US officials told the newspaper the aid and equipment supply could be resumed if relations improve and Pakistan takes more action against fighters.
About $300m in US funding is to reimburse Pakistan for deploying more than 100,000 troops along the Afghan border to combat Taliban and other forces. Other funding covers training and military hardware, the report said.
It said that in private briefings with congressional staffers last month, Pentagon officials said they would be taking a stronger stance toward Pakistan.
Relations with Pakistan have become increasingly tense after the secret US raid into Pakistan in May that killed al-Qaeda leader Osama bin Laden.
Pakistan has expelled 100 US military trainers as public sentiment against the US has grown.
Tensions grew in recent days after Admiral Mike Mullen, the US joint chiefs of staff, said he believed that Pakistan intelligence officials had directed the killing of a journalist.
Hillary Clinton, the US secretary of state, warned last month in testimony before Congress that the US was not prepared to continue military aid "at the pace we were providing it unless and until we see certain steps taken."