The Global Fund has stopped health aid payments to Zambia because of alleged government corruption.
More than £203million in health aid for Aids, Tuberculosis and Malaria has been suspended because of worries about corruption.
Meanwhile activists there were planning a march on the US consulate to protest against President Barack Obama's reduced funding for AIDS.
The Global Fund stopped payments to the south African nation’s Health Ministry last August, it said. But it only confirmed the freeze this week as news of it leaked out. Grants worth £81m have not been paid, although £11m was handed over to other agencies to guard life-saving services, such as the supply of AIDS drugs.
"The national authorities have failed to provide assurance of appropriate action regarding the fraud against Global Fund grant programmes," the UN-initiated Fund said in a report seen by Reuters news service on Tuesday.
The Global Fund said the freeze came after Zambian authorities last year uncovered fraud within its own Ministry of Health. Further investigations showed that the Ministry of Health was not able to safely manage grants. The organisation has demanded the Ministry of Health t return £5m in unspent funds and asked that Zambia takes action against people involved in the unaccounted expenditures.
The Fund expects that the money will start flowing again within a couple of months, but this time through the United Nations development programme instead of the Ministry of Health.
Today campaigners were expected to march on the US Consulate in Johannesburg in protest at Obama's cuts in funding for Pepfar, the President's emergency plan for AIDS relief. They will hand a memo to deputy president Joe Biden, who is visiting for the World Cup.
The freeze comes a year after Sweden and the Netherlands suspended £22m in Health Ministry aid to Zambia because of a missing £4 million.
The European Union has also halted aid earmarked for road building because of similar concerns.
The Global Fund gets the bulk of its funds from the United States, Europe and Japan, and magnates such as Bill Gates also chip in.
Zambia has one of the world’s most devastating HIV and AIDS epidemics. More than one in every seven adults in the country is living with HIV and life expectancy at birth has fallen to just 39 years, according to figures from the AIDS charity, Avert. In 2009, nearly 83,000 adults were newly infected with HIV that is about 200 new infections each day.