US officials Tuesday denied that protests in Cairo over an anti-Islam Internet video have stalled talks on relieving $1 billion worth of Egypt's debt to the United States.

State Department spokeswoman Victoria Nuland said a report in the Washington Post that talks on wiping out the debt had been delayed was "wrong."

"We are working with the Congress now on how we will move forward on this. We've made an initial budget request," she told reporters.

The debt relief is intended to provide crucial economic aid to Egypt's newly elected government as it grapples with daunting economic challenges in the wake of the 2011 uprising that toppled longtime president Hosni Mubarak.

The Post cited US officials as saying Egypt can expect little relief -- at least until after the November 6 US presidential vote -- after Cairo's delayed response to last week's violent protest outside the US embassy in Cairo.

"Folks are going to wait and see how things materialize both with the protests and on Capitol Hill," it quoted a congressional aide as saying.

But Nuland stressed: "We have worked with the Egyptians on precisely how we see breaking down this support, and now we have to work with the Congress on ensuring we can move forward."

The Post said any delay was likely to be temporary, and that there was no major reconsideration of US aid to Egypt, which amounts to some $1.5 billion per year.

Egyptian forces were slow to react when demonstrators attacked the US embassy last Tuesday, scaling the walls, tearing down the American flag and hoisting a black Islamist flag in its place.

US President Barack Obama called his newly elected Egyptian counterpart Mohamed Morsi to express concern about the incident and told an interviewer that Egypt's new government was neither an ally nor an enemy.

Egyptian security forces later moved in, clashing with the demonstrators for several days but keeping them away from the embassy.

Morsi, a former top member of the Muslim Brotherhood, later said he supports peaceful protests against the offensive video but condemned violence against diplomatic facilities or personnel.

The embassy protests and the growing regional unrest have strained relations between the United States and Egypt, which under Mubarak had assisted with US-led Middle East peace efforts and other regional initiatives.