"Restoration of the terminated assistance will be predicated upon a return to democratic, constitutional governance in Honduras," a statement from the State Department said.
The suspended aid amounted to about $22 million, and officials said $200 million in Millennium Challenge funds also were at stake, reported the New York Times.
Honduras' army removed Zelaya from power on June 28 after he angered members of Congress and the Supreme Court with proposals to change the constitution to allow presidents to seek re-election.
Zelaya traveled to Washington this week to make his case, saying Wednesday at a talk hosted by George Washington University and the Center for Economic and Policy Research that he hoped the United States would designate his removal as a military coup.
"When diplomatic action runs out, when the United States indicates it can't do any more, I am not going to simply sit around with my arms crossed," Zelaya said in an interview with the Washington Post.
The State Department said it "recognizes the complicated nature of the actions which led to June 28 coup d'etat in which Honduras' democratically elected leader, President Zelaya, was removed from office. These events involve complex factual and legal questions and the participation of both the legislative and judicial branches of government as well as the military."
Zelaya also contested the Honduran interim government's justifications of his ouster, saying his anti-poverty initiatives were the reason for his deposition, and not the specter of constitutional reform.
A mediation process headed by Costa Rican President Oscar Arias has stalled. Honduras' interim president Roberto Micheletti refuses to allow Zelaya to enter the country and opposes any resolution that calls for his reinstatement -- Zelaya, meanwhile, staunchly resists any outcome other than his returning to office.
The Organization of American States expelled Honduras on July 5, and a number of Latin American nations have publicly condemned the coup, including Mexico, Brazil and Ecuador. The United States has had strained relations with Zelaya, and while Clinton was quick to decry the overthrow, she didn't withhold criticism of his attempt to return to Honduras on July 25, calling his actions "reckless" and detrimental to "the broader effort to restore democratic and constitutional order in the Honduras crisis."
On Friday, Micheletti offered a proposal to the OAS in which he would resign, so long as Zelaya did not return to power. The OAS rejected that plan.
Zelaya said he also hoped the United States would acknowledge human rights violations allegedly committed by the new government in Honduras. Amnesty International said protesters were being beaten and arrested by police and the military for opposing the new government, according to the Agence-France Presse.
The Inter-American Commission on Human Rights, an arm of the OAS, issued a report describing "the use of repression against demonstrations through the placement of military roadblocks; the arbitrary enforcement of curfews; the detentions of thousands of people; cruel, inhuman, and degrading treatment; and poor detention conditions," CNN reported.
Honduras' interim government has accused Zelaya of a litany of legal offenses, particularly his administering of an opinion poll gauging public interest in a National Constituent Assembly -- a poll that was opposed by Congress, the Supreme Court and the attorney general. Zelaya's opponents claim that the president aimed to revise the country's 1982 Constitution via the Assembly in order to extend his presidential term.
On Wednesday, Zelaya denied such allegations and accused the coup supporters of protecting an oligarchy and its private interests at the expense of democratic process and social welfare.
The constitutional amendments that the interim government finds threatening are reminiscent of those enacted by Venezuela's Hugo Chavez, who has been a long-standing supporter of Zelaya. The deposed president has downplayed his relationship with Chavez, whose government has offered fiscal and political support for Zelaya's social programs.
While Chavez has been one of the most vocal advocates of the ousted president, putting his military on alert immediately after the coup, the Venezuelan leader expressed doubts last week as to whether Zelaya would be reinstated, telling the Associated Press, "regardless of whether Zelaya returns or not, and really, at this point, that's hard to imagine, Honduras will keep up the fight."
Reports have speculated about the interim government's strategy for the Nov. 29 elections. Micheletti hopes to hold onto the presidency until then, when a new president is elected, although Zelaya is skeptical of the acting government's commitment to the democratic process.
---- Compiled by Anne Strother for the Online NewsHour