The officials, who spoke on condition of anonymity, said on Wednesday that top US national security advisers made the proposal to Obama, the Associated Press reported.
However, they added that Obama is not expected to make a decision until after the US Congress reconvenes on September 9 and votes on his request for authorization for military strikes on Syria.
The officials noted that the recommendation calls for a significant cut in the amount of the aid provided to the North African country but it was up to the US president to decide how much of it should be withheld.
Washington has shown no sign that it will cut off its annual aid to the Egyptian military in response to the July 3 military-led coup that toppled Egypt’s first democratically elected president.
The US has so far refused to call Morsi's ouster a coup.
About 1,000 people were killed in a week of violence between Morsi anti-coup protesters and security forces after police dispersed their protest camps in a deadly operation on August 14.
The US provides Egypt with $1.5 billion annual aid, $1.3 billion in military and the rest in economic. Experts say the assistance is aimed at forcing the Egyptian government to abide by the Camp David accords with Israel.