Three US citizens move into embassy as tensions mount over Egyptian crackdown on pro-democracy and human rights groups

Three Americans barred by authorities in Egypt from leaving the country have sought refuge at the US embassy in Cairo, officials say, as tensions between the two allied nations sharply escalated over an inquiry into foreign-funded organisations.

The unusual step comes amid a row over an Egyptian crackdown on US-funded groups promoting democracy and human rights that has jeopardised more than $1bn of crucial US aid to Egypt, one of its biggest recipients.

The investigation is closely intertwined with Egypt's political turmoil since Hosni Mubarak's fall nearly a year ago. The generals who took power have accused "foreign hands" of being behind protests against their rule and frequently depict the protesters as receiving foreign funds in a plot to destabilise the country.

Egyptian authorities are preventing at least six Americans and four Europeans from leaving the country, citing an investigation opened last month when heavily armed security forces raided the offices of 10 international organisations. Egyptian officials have defended the raid as part of a legitimate inquiry into the groups' work and funding.

Those banned include Sam LaHood, son of the US transport secretary, Ray LaHood, but officials would not say whether he was at the embassy. The younger LaHood, who heads the Egypt office of the Washington-based International Republican Institute, referred queries to a spokeswoman in Washington who did not return calls seeking comment.

The US state department spokeswoman Kate Starr told reporters in Washington on Monday that the citizens were in the embassy.

"A handful of US citizens have opted to stay in the embassy compound in Cairo while waiting for permission to depart Egypt," she said.

Another official, speaking on condition of anonymity, said three Americans were at the embassy, adding that the move was not because the US feared their imminent arrest.

US officials have warned that restrictions on civil society groups could hinder aid to Egypt, which would be a major blow to the country as it struggles with economic woes and continued turmoil since the popular uprising that led to Mubarak being ousted last year. Egypt's military has been locked in a confrontation for months with protesters who demand it immediately hand over power to civilians.

The Egyptian army itself receives more than $1bn a year from Washington. The December raids brought sharp US criticism, and last week the US president, Barack Obama, spoke by telephone with the Egyptian military chief Field Marshal Hussein Tantawi about the issue.

Recent US legislation could block annual aid to Egypt unless it takes certain steps. These include abiding by its 1979 peace treaty with Israel, holding free and fair elections and "implementing policies to protect freedom of expression, association and religion and due process of law".

The US is due to give $1.3bn in military assistance and $250m in economic aid to Egypt in 2012. Washington has given Egypt an average of $2bn in economic and military aid a year since 1979, according to the Congressional Research Service.

Sam LaHood said last week that three other employees of his organisation were on the no-fly list; two American and one European.

From the National Democratic Institute, which was also raided in December, three Americans and three Serb employees are on the list, the group's Egypt director, Lisa Hughes, said last week.