America has withdrawn $33m in aid from Pakistan in protest at the 33-year sentence given to a Pakistani doctor who helped the CIA find Osama Bin Laden.
The US Congress is holding back $1m for every year that Dr Shakil Afridi was jailed for treason.
Dr Afridi was accused of running a fake vaccination campaign used to collect DNA to confirm the al Qaeda leader was in the town of Abbottabad, where he was killed in a US special forces raid .
US Secretary of State Hillary Clinton and Defence Secretary Leon Panetta have both previously called for the former government doctor to be released, saying his work served Pakistani and American interests.
Senators Carl Levin and John McCain, who sit on the American armed services committee, called the sentence "shocking and outrageous" and called for Dr Afridi to be pardoned and released immediately.
The US Congress later passed a motion imposing the freeze on \$33m of aid to Pakistan.
Sky's US Correspondent Dominic Wagorn said: "This is pretty unprecedented by the American Congress to impose this penalty.
"This does seem to be the latest in a tit-for-tat exchange of retaliations over the issue (of Bin Laden's killing) .
"Dr Afridi has been caught in the middle - he has been jailed for 33 years and America now says for every one of those years, \$1m will be withheld until he's released from jail."
A spokesman for Pakistan's foreign ministry said the US should respect the court's decision.
"I think as far as the case of Mr Afridi is concerned, it was in accordance with Pakistani laws and by the Pakistani courts, and we need to respect each other's legal processes," Moazzam Ali Khan told reporters.
On Wednesday, Mohammad Siddiq, a spokesman for the administrative head of the Khyber region, said: "He has been sentenced for 33 years on treason charges and has been moved to Peshawar central jail after the verdict was announced by the local court."
Later reports said Afridi was in poor health and being kept in isolation at the prison due to fears for his safety.
In January, Mr Panetta told CBS television's 60 Minutes: "He was not in any way treasonous towards Pakistan.
"For them to take this kind of action against somebody who was helping to go after terrorism, I just think is a real mistake on their part."
Pakistani officials say when they arrested Afridi, they recovered a GPS device that was given to him by US intelligence to arrange meetings with his handlers.
The doctor was tried under the frontier crimes regulations, or FCR, the set of laws that govern Pakistan's semi-autonomous tribal region.
He had no right to legal representation, to present material evidence or cross-examine witnesses.
The imprisonment comes at a sensitive time for relations between the US and Pakistan, with the two sides engaged in talks over the re-opening of Nato supply routes to troops in Afghanistan.
The supply routes were closed six months ago in retaliation for American airstrikes that killed 24 Pakistani soldiers.