WASHINGTON (Reuters) - The administration of President Joe Biden decided to withhold $130 million in foreign military aid from Egypt because it failed to meet human rights conditions, but allowed some of the money because it determined Cairo had made progress on political arrests, U.S. officials said on Wednesday.

The officials added that Secretary of State Anthony Blinken determined that Cairo had made some progress on political arrests and due process by releasing hundreds of prisoners.

And human lefts groups pressed for the blocking of the entire quota of aid, which the US Congress tied to conditions, amounting to 300 million dollars.

Rights groups have attributed this to widespread human rights abuses under the government of President Abdel Fattah al-Sisi, including torture and enforced disappearances.

The aid that Blinken decided to withhold represents 10 percent of the $1.3 billion allocated to Egypt annually. An official said State Department lawyers have decided that 10 percent is the maximum that can be withheld this year.

Washington will allow the release of $75 million to Egypt, noting the progress made in terms of political arrests and due process, including the release of about 500 political prisoners this year.

US State Department officials said Cairo would receive another $95 million under a legal exception related to counterterrorism, border security, and "non-proliferation" funding.

"The approach taken here reflects the administration's concerns about human rights and fundamental freedoms in Egypt, while at the same time striving to maintain the interaction and dialogue we've had over the past 20 months," a senior ministry official told reporters.

"We have been... very clear with the Egyptian government at all levels regarding the necessary measures and steps to strengthen our relationship."

Seth Binder of the Project on Middle East Democracy, a US-based human rights organization, said Washington's claim that Egypt has made progress is belied by the continued holding of political prisoners.

“While the withholding of funds sends a message to Sisi that failure to address US human rights concerns will have a tangible impact on the relationship, the false assertion that progress is being made, when there is no (progress), distorts that message.”

Sisi denies the existence of political prisoners in Egypt. He says that stability and security are of paramount importance and that the authorities are working to advance rights by trying to provide for basic needs such as jobs and housing.

Analysts say Western powers are reluctant to take serious action against a strategic ally that mediates long-standing issues such as the Arab-Israeli conflict and controls the Suez Canal, one of the world's most important shipping lanes.

US officials say the relationship with Egypt is complicated. The most populous Arab country is a key ally, and Washington remains committed to supporting its "legitimate defense needs."