Russia on Wednesday said it had given USAID until 1 October to halt activities as it was meddling in domestic politics, a move that risks sparking a new diplomatic crisis with Washington.
The termination of the US Agency for International Development's work in Russia may also seriously harm the operations of a string of NGOs that are heavily dependent on its funding, including vote monitor Golos that showed up irregularities in recent elections.
The unexpected move appears part of an increasing crackdown in Russia on civil society after President Vladimir Putin's return to the Kremlin for a third term in May amid an outburst of street protests.
"The decision was taken mainly because the work of the agency's officials far from always responded to the stated goals of development and humanitarian cooperation," the Russian foreign ministry said in a statement.
"We are talking about attempts to influence political processes -- including elections at different levels -- through its distribution of grants," it added.
USAID's activities "must be halted from October 1," it added, giving a short deadline that had not been revealed by the Americans when the decision was first made public in Washington on Tuesday.
Anxious Russian NGOs expressed fears for their future financing -- more than half of USAID's annual budget in Russia had been spent on democracy and civil society programmes as well as a substantial chunk on health projects.
"I am very sorry that the USAID office is closing," said Arseny Roginsky, the chairman of Memorial, Russia's best-known rights group which campaigns for human rights and preservation of historical memory across the country.
"It is impossible not to see here the continuation of the isolationist policy" of the Russian authorities, he added. Without giving further details, he described the material help of USAID as "significant".
Lilia Shibanova, the director of the independent election monitor Golos, described the halt in USAID's operations as a "heavy blow".
She told AFP that there was now serious concern for the funding of its monitoring of Russian local elections on October 14 two weeks after the deadline for the closure of its office.
"The problem is that as soon as Russian business starts giving funds to monitor elections it comes under pressure."
The expulsion of USAID comes after Putin signed a law forcing NGOs who receive funding from abroad to register as "foreign agents". He has even compared organisations like Golos to the disciple Judas who betrayed Jesus.
A senior US administration official said that Washington regretted the decision by the Russian government, which according to a US government source also affects the future of 13 US staff in Moscow and 60 Russian staff.
"We lament the fact that we will not be able to do the work that we are very proud that we have been doing. This is a difficult day for USAID," said the official, who asked not to be named.
It is unclear whether some if any US funding of the organisations can continue but the official said that the administration of US President Barack Obama was committed to promoting civil society in Russia.
"Over the coming weeks and months the Obama administration will be looking at ways to advance our old foreign policy objectives using new means," said the official.
He said the United States had first learned of the measure when Secretary of State Hillary Clinton attended the APEC summit in Vladivostok earlier this month.
The Kommersant daily compared the departure of USAID to the 2007 clampdown on the activities of the British Council which poisoned relations between Moscow and London. The US Peace Corps had also been asked to leave Russia in 2002.
"The departure of USAID is the biggest conflict between Moscow and the West in the last five years in questions of democracy and human rights in Russia," the paper said.