The US government is not planning to continue funding reconstruction projects in Iraq, in what appears to be a major climbdown from the White House's one-time pledge to build the best infrastructure in the region.

According to officials cited in yesterday's Washington Post, the Bush administration will not be adding construction funds to the $18.4bn (£10.7bn) it has allocated since the 2003 invasion.

In future it will be up to other foreign donors and the Iraqi government to do what it can to complete even basic tasks such as supplying reliable electricity and water to the country's 26 million people.

It is a badly kept secret that reconstruction has gone badly. Essential services have been very slow in coming back on line and roughly half the money earmarked for reconstruction has been diverted into the military effort against the insurgency. The newspaper quoted Brigadier General William McCoy, the commander overseeing construction projects, saying the US funding was never meant to be more than a "jump-start ... The US never intended to completely rebuild Iraq," he said.

If confirmed, the withdrawal of reconstruction funds from America would be a further signal that the Bush administration is looking at ways to lessen the US commitment to Iraq as it faces increasing political pressure to start finding a way out.

It is also one further sign that US ambitions for Iraq have been thwarted by realities on the ground. Iraq's oil production, seen before and after the war as a key strategic asset, has been so hampered by infrastructural problems and sabotage that it remains significantly lower than it was at the time of the invasion.

The output of Iraq's national electrical grid is also lower than it was prior to the invasion. The average Iraqi household has electricity for only half the day at best - and in Baghdad there is electricity for no more than six hours a day.

* The Lincoln Group - set up by Christian Bailey, an Oxford graduate - has been paying Sunni clerics for consultations on how to write pro-US propaganda that would persuade Sunnis to participate in elections and oppose the insurgency. The company received $100m from the US government to place the stories.