"We have made very clear in our statements that we consider the military move a step backward for Thai democracy and a very sad development for Thai democracy," said Assistant Secretary of State for East Asian Affairs Christopher Hill.

"We are also reviewing our assistance to Thailand in light of the various legal implications for a country in which there has been a military coup to depose an elected civilian leadership," he said.

The review covers military aid. Thailand is a key ally of the United States in Asia.

It also enjoys the status as a "major non-Nato ally," a designation given by Washington to exceptionally close allies who have strong strategic working relationships with US forces but are not members of the North Atlantic Treaty Organization.

Under the so called Foreign Operations Assistance Act, the United States has budgeted about 14 million dollars in bilateral assistance, including four million dollars in the military area, to Thailand in fiscal 2006, the State Department said.

Thailand also participates in some US regionally funded programs, it said.

"We are undertaking a review of US Government programs to determine which constitute direct assistance to the government of Thailand and whether there may be additional relevant programs," the department said.

"The US urges the swift return to democratic rule and free elections in Thailand," it said.

Hill said the United States was "monitoring developments very closely" in Thailand and that discussions were continuing within the government over its aid program.

Thailand's ruling generals on Thursday banned all political activities and assumed legislative powers in the absence of a parliament following Thaksin's ouster, cementing their grip on power two days after the bloodless coup.

Coup leader General Sonthi Boonyaratglin has annulled the constitution, imposed martial law, banned public gatherings and closed much of the country's land border. Media restrictions have also been put in place.

The ban on political activities and other restrictions "would constitute a setback for democratic rule in Thailand, and I think would go against some of the statements that the coup leaders themselves have made," said deputy state department spokesman Tom Casey.

General Sonthi had pledged to resign from power in two weeks and restore democracy in a year and said he hoped to hold new elections in October 2007.

"We'd like to see more rapid progress than that and think that, again, a swift return to democratic civilian government is in order, and that includes a swift holding of elections," Casey said.

Agence France-Presse