Sen. John McCain said Monday Egypt's military rulers have reassured him that authorities are working "diligently" to resolve a criminal case against US pro-democracy groups that has brought relations between the two allies to their lowest point in decades.

As part of a crackdown on nonprofit organizations, Egyptian authorities have referred 19 Americans and 24 others to trial on charges that include the illegal use of foreign funds, expected to begin on 26 February. McCain chairs one of the four American groups targeted, the International Republican Institute.

McCain didn't elaborate on how the case may be resolved. He had met earlier in Cairo with the country's military ruler Field Marshal Hussein Tantawi.

"He gave us his assurance that they are working very diligently to try to resolve the NGO issue," McCain told reporters after a day of conferences with Egyptian officials, newly elected lawmakers, and members of Egypt's powerful Islamist group, the Muslim Brotherhood.

US officials and legislators have threatened to cut Egypt's US$1.5 billion package over the crackdown on the democracy groups. The case began in December with raids on the groups' Egypt offices, and Egyptian judges and officials subsequently accused them of using foreign funds to foment unrest in the country through supporting political activities and protests.

McCain said threats to cut US aid to Egypt, which now includes an annual $1.3 billion to the military and about $250 million in economic aid, may be counterproductive in resolving the non-governmental organization issue.

"The way we approach this issue of NGOs is with some guarded optimism that we will resolve this issue fairly soon," he said. "We don't think it helps progress on this very difficult situation for American citizens to make threats. We are not making threats. There is plenty of time to make threats.

"What we are seeking in all our meetings today was …the mutuality of interests, common cause and our support in this very difficult transition to democracy."

Senator Richard Blumenthal, D-Connecticut, who was with McCain appealed to the Egyptian authorities to allow the seven accused US citizens banned from travel to return home.

"The best way to show that model (respecting democracy and freedom) and send a message is to enable these individuals to return home and to respect the organizations they have worked hard to build," Blumenthal told reporters.

He was referring to Egypt's upcoming challenge of writing a new constitution, which he said should incorporate the highest standards of international conduct in respecting democracy and freedom.

Egypt under Mubarak was Washington's closest Arab ally in the Middle East and a loyal partner in the fight against Islamic extremism and terror. Mubarak also kept the 1979 peace treaty with Israel, a cornerstone of US foreign policy in the Mideast.

But with the military on the defensive over criticism that it has bungled the transition to democracy and with the rise of an Islamist-dominated parliament, Egypt's transitional rulers appear to be more ready to publicly challenge the US and Israel, even at the risk of losing critical foreign aid. That stance taps into widespread anti-Israel and anti-US sentiment in Egypt.

The ruling Supreme Council of the Armed Forces has regularly accused "foreign hands" of backing continued protests against its rule. And the Islamist parties that control over two-thirds of the newly elected parliament have threatened to review the peace treaty with Israel if US aid to Egypt is halted.

Four US-based nonprofit groups are among those targeted, as well as a German agency.

While speaking at a business conference just before meeting with the country's military leaders, McCain said that US relations with Egypt are changing a year after the ouster of Hosni Mubarak but the two countries "must remain friends."

"Egypt is changing. It is true, and as such, the nature of America's partnership with Egypt is also changing," McCain told a room full of US and Egyptian businessmen.

"But … we must remain the strongest of friends, politically, economically and militarily. We must maintain and strengthen the key pillars of that partnership, especially our commercial and trading relationship and where the people of Egypt and their newly elected government make the right decisions about the policies that will shape their sovereign nation's future," he said. "We must be here to reinforce and support them."

He said the American people are committed to the success of Egypt's transition, which he called "a brand experiment in democratic rule and economic empowerment."

He said one of the main challenges to Egypt's transition to democracy remains the deteriorating economic situation in the country of 85 million.

"Unless Egypt can create jobs for the millions of young people in this country who desire a future of dignity for themselves, the politics of Egypt will be unsettled and the forces of extremism here could grow more and more powerful," he said.

McCain, a member of the Senate's Armed Services Committee, is leading a Congressional committee visiting various countries in the Middle East as well as Afghanistan.