The Trump administration has given the World Health Organization an ultimatum to carry out reforms and change policy towards China and coronavirus, but diplomats said the White House has not made clear exactly what it wants the WHO to do.

Donald Trump ordered his administration to stop funding the global health agency in the midst of the pandemic pending a “thorough investigation” that he said would take 60 to 90 days, accusing the WHO of “severely mismanaging and covering up” the Covid-19 outbreak.

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Washington has signalled that the block on funding could be lifted if the WHO leadership altered its behaviour, to make it less “China-centric”, but it has not been clear about what it wanted, according to diplomats familiar with the discussions.

“We understand this is a decision to halt funding … unless the administration sees from the WHO evidence that the WHO are not in hock to China, they are tackling the pandemic transparently on the best available evidence, and are committed to reform,” a European diplomat said. “I don’t think the administration has set out precisely what they are looking for from the WHO, and they have not, to the best of my knowledge, said which sort of funding is going to be cut.”

The US is the biggest contributor to the WHO’s annual budget of about $2.5bn. It gives $119m a year in assessed contributions (membership dues) and $328m in donations, and is currently about $200m in arrears. Whether the administration has the authority to cut off funds which have been mandated by Congress is in dispute, with the Democratic House speaker, Nancy Pelosi, calling Trump’s move “illegal”.

A senior administration official said the Trump administration was within its rights to divert funds to other organisations in the same field. The official said the first tranche of $58m of US-assessed contributions for the year had already been paid, and the second tranche of $65m was not due until September. Meanwhile there would be a 60-day review conducted by the Office of Management and Budget (OMB), while other partners are sought through which to channel money earmarked for WHO donations.

“Now that money is on hold pending a policy review, so we can figure out where we can partner up with different organizations or contractors on the ground to spend it, and obviously use it for the purpose for which it was intended,” the official said.

A state department spokesman said: “Our action in no way diminishes US leadership on global health matters, including the current Covid crisis. We have ample ability to provide aid ourselves or through other partners to fight the pandemic, and we will continue to do so.”

He added that the state department and the US agency for international development had committed nearly $508m in emergency health, humanitarian and economic assistance.

The White House issued an account of a conference call between the leaders of the G7 industrialised democracies, claiming “much of the conversation centered on the lack of transparency and chronic mismanagement of the pandemic by the WHO”.

That claim was contradicted by accounts from other G7 governments, expressing support for the organisation and urging international cooperation. Several have raised their WHO contributions. The UK offered an extra £65m this week.

US allies were taken by surprise by Trump’s 14 April announcement on cutting WHO funding and were therefore unable to mount a concerted campaign to persuade him out of the decision, although the French president, Emmanuel Macron, made an attempt last week.

“Macron tried to call, but actually, the Americans – who originally told us that they were looking at the number of options for the WHO – quickly on Easter Monday decided that they would make this announcement about halting funding,” the European diplomat said.

“So to the best of my knowledge, nobody in the west had enough visibility to actually persuade them not to do it. But a number of us over the last few weeks have been saying: we know the WHO has problems, but we believe the priority is to tackle the pandemic.”

House Republicans on Thursday urged Trump to make continued US support for the WHO conditional on the resignation of its director general, Tedros Adhanom Ghebreyesus, who has been widely criticised in the US for remarks praising China’s handling of the pandemic. However, that is not the approach the White House has taken so far, aware that Tedros was elected by member states.

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One of the options US officials have floated informally in recent days has been for the WHO to grant Taiwan observer status. However, that too is a decision made by member states. The UN general assembly decided in 1971 to recognise the People’s Republic of China as the sole legitimate representative of China and the WHO followed suit the following year. The issue has been discussed 14 times over the past 22 years in the World Health Assembly, but each time the proposal has been rejected.

“We are in the hands of countries on these issues,” the WHO’s principal legal officer, Steven Solomon, said. “WHO staff don’t have the mandate or power to change that. Our mandate is to work to promote the health of all people everywhere.”