The Chinese government has announced retaliatory measures over a planned sale of advanced US weaponry to Taiwan.

China's defence ministry said it would suspend military exchanges with the US, impose sanctions on companies selling arms to Taiwan and review wider co-operation on international issues.

The confrontation over the $6.3bn (£4bn) arms sale to Taiwan – a self-governing island that Beijing considers part of its sovereign territory – threatens to strain a relationship already troubled by disputes about internet censorship and trade.

The planned arms sales, announced by the US military yesterday, could hinder Washington's efforts to win Chinese support for sanctions against Iran over its nuclear programme and exacerbate disputes over the standoff between Beijing and internet giant Google over censorship.

The state-run Xinhua news agency cited the defence ministry as saying the suspension was due to the "severe harm" of the arms sales on relations between the US and China.

Included in the proposed arms deal are two Osprey mine-hunting ships, 60 Black Hawk helicopters, missiles, machine guns and ammunition, night vision gear, radar equipment and information technology.

"This is definitely going to cause considerable tension in the relationship," a US official who has served in China told the Guardian. The official added that relations between the US, China and Taiwan had improved in the past two years under Taiwan's president, Ma Ying-jeou.

Officially the US downplayed the threat to the bilateral relationship, claiming that the sale would not alter the balance in the region.

The sale indicates that Barack Obama will continue the US policy of maintaining the diplomatic status quo between China and Taiwan, while providing the island with weapons to deter Chinese military action. In 2008, for example, the Pentagon announced the sale of $6.4bn in aircraft and missiles.

"We have worked through these issues before," a state department official said. "We will work through them again.

"This is a clear demonstration of the commitment that this administration has to provide Taiwan the defensive weapons it needs. We think this action contributes to maintaining security and stability across the Taiwan Strait."

The announcement comes in an unusually tense period between China and the US, which maintain close economic links. Last week the secretary of state, Hillary Clinton, called on Beijing to investigate claims by Google of a co-ordinated attack on the email accounts of rights activists that originated in China.

She likened Chinese online censorship to the rise of communist Europe, warning that an "information curtain" threatened to descend on the world unless action to protect internet freedom was taken.

Beijing called the charges baseless and said Clinton's remarks hurt the relationship between the two countries.

With the miserable state of the US economy contributing to tension with China, America's largest creditor nation, the US public and members of Congress are becoming restless for action on China's rights record.

China and Taiwan have had an uneasy relationship since the founding of the People's Republic of China in 1949.

Taiwan maintains significant defence capabilities, in large part due to decades of arms purchases from the US. Its primary military mission remains defence against aggression from China, which has not renounced the use of force against to the island.

The US recognises Beijing as the sole legal government but maintains significant unofficial links with Taipei. The US does not support Taiwanese independence and opposes unilateral action by either side to alter the status quo. Taiwan maintains an economic and cultural representative in Washington.