Relations between Egypt's military rulers and the United States threatened to hit a new low after Egyptian security forces launched unprecedented armed raids on a series of high profile human rights and pro-democracy organisations.

The raids included targeting the US-government funded National Democratic Institute – founded by former secretary of state Madeleine Albright – and the International Republican Institute, whose chairman is Republican senator John McCain. Both organisations are affiliated with the two major US political parties.

The orchestrated move by Egypt's generals, apparently keen to play up to anti-US and nationalist feelings in the country, will be seen as highly provocative in Washington, which underwrites military aid to Egypt to the sum of $1.3bn (£843m) annually.

"We are deeply concerned," a State Department official told the Guardian.

The raids prompted a stern response from the organisations targeted. The IRI immediately condemned the raids, claiming they were worse than took place under Egypt's former dictator Hosni Mubarak.

"IRI is dismayed and disappointed by these actions. IRI has been working with Egyptians since 2005; it is ironic that even during the Mubarak era IRI was not subjected to such aggressive action," the group said in a statement.

Meanwhile, NDI president Kenneth Wollack urged Egyptian authorities to allow the centre to reopen and to return any confiscated property. "Cracking down on organisations whose sole purpose is to support the democratic process during Egypt's historic transition sends a disturbing signal," Wollack said.

Security forces also raided the offices of Washington-based Freedom House.

During the raids riot police confined staff to their offices and forbade them from making phone calls. Seventeen Egyptian and international groups were targeted as part of a widespread investigation into foreign funding of Egyptian civic society groups.

The State Department official said US authorities had been in touch with senior Egyptian figures at "high levels" and that ambassador Anne Patterson had been in contact with the prime minister, Kamal al-Ganzouri.

"We call on the Egyptian government to resolve this issue immediately and to end harassment of NGO staff as well as return all property," the official said.

In recent months, the Supreme Council of the Armed Forces has accused local non-governmental organisations of receiving money from abroad, and has argued that the recent unrest in the country is by "foreign hands".

Hana el-Hattab, an NDI staffer trapped inside her office, tweeted: "We're literally locked in. I really have no idea why they are holding us inside and confiscating our personal laptops." In other tweets she wrote: "I was on the balcony, dude with machine gun came up and told us to go in and locked it … we asked if they had a search warrant, they said the person who issues warrants is in building & doesn't need to issue one for himself. They're even taking history books from people's bags."

The National Democratic Institute is supported in its work by the US State Department, USAID and the National Endowment for Democracy.

Heba Morayef, who works with Human Rights Watch in Egypt, said she had received a message from an NDI staffer confirming they had been confined inside their offices by riot police. Images posted on Twitter showed armed police in body armour stationed outside.

The Egyptian news agency Mena said the 17 "civil society organisations" had been targeted as part of an investigation into foreign funding of such groups.

"The public prosecutor has searched 17 civil society organisations, local and foreign, as part of the foreign funding case," Mena cited the prosecutor's office as saying. "The search is based on evidence showing violation of Egyptian laws including not having permits."

Security forces, both uniformed and plain-clothes, forced their way into the offices, where employees were informed that they were under investigation by the public prosecutor. According to witnesses, laptops and other documents were also seized during the raids.

The raids follow a far-reaching investigation into the foreign funding of human rights and civic advocacy groups launched under the aegis of the country's ruling generals earlier this year.

Ironically, the law being used to pursue the groups is one from the era of Mubarak, which the government had said it intended to repeal.

During the Mubarak era, groups such as NDI and IRI and others had existed in a grey area, unable to obtain permission to operate in full legal compliance.

Other groups reportedly raided, according to activists, include the Konrad Adenauer-Stiftung, which supports political dialogue, Freedom House, and the Egyptian Public Budget Observatory.

Morayef condemned the raids, and the investigation that led to them, as "entirely inappropriate", adding: "This is part of a wider crackdown on civil society groups in Egypt using Mubarak-era laws. They are using these pre-revolution laws as a broadbrush investigation that could result in wholesale shutting down of human rights and other groups that have been at the forefront of criticism of the army.

"This is very selective and really, really serious. It has huge potential implications for human rights in Egypt."

The Cairo Institute for Human Rights Studies said: "The NDI, IRI and Freedom House have been previously investigated by the ministry of justice on charges of receiving foreign funding, while the Arab Centre for the Independence of Justice and Legal Professions has not been yet investigated."

The army has pledged to step aside by mid-2012. "In Mubarak's time the government never dared to do such a thing," said prominent human rights activists Negad el-Bourai on his Twitter account.

Political experts said the groups raided on Thursday have taken a neutral political stance, focusing on fostering democracy in Egypt by training members of nascent parties. "The National Democratic Institute has been training new parties … in how to participate in elections," a leading member of a liberal party said on condition of anonymity. This has been with the full knowledge of authorities and was not clandestine."

The NDI and IRI say they take a neutral political stance, fostering democracy in Egypt by training members of nascent parties in democratic processes.