"We had expected President (Mohamed) Morsi at some point to coordinate changes in the military leadership, to name a new team," Pentagon press secretary George Little told reporters.

"The United States and the Department of Defense in particular look forward to continuing a very close relationship with the SCAF (Supreme Council of the Armed Forces)," Little said.

Morsi on Sunday retired Defense Minister Field Marshal Hussein Tantawi, 76, and armed forces chief of staff Sami Anan. He also scrapped a constitutional document that gave the military legislative and other powers.

The Egyptian president replaced Tantawi, who had forged links with top American brass over decades, with Abdel Fattah al-Sissi, head of military intelligence.

"The new defense minister is someone who's known to us, he comes from within the ranks of the SCAF and we believe we'll be able to continue the strong partnership that we have with Egypt," Little said.

US Defense Secretary Leon Panetta "looks forward" to calling him "at the earliest possible moment," he added.

During a brief visit to Cairo on July 31, Panetta gave no indication he expected any change in Egypt's military leadership, but reaffirmed US support for a democratic transition, saying the country has helped ensure regional stability for more than 30 years.

The White House earlier Monday urged Egypt's military and government "to work closely together to address the economic and security challenges facing Egypt," press secretary Jay Carney told reporters.

The United States provides about $1.3 billion annually in aid to Egypt, a key ally since the 1979 Israeli-Egyptian peace accord.

US officials are concerned that the new leadership in Egypt may alter its foreign policy, amid fears that Morsi -- an Islamist and Egypt's first democratically-elected president -- might seek to renegotiate the treaty.

The announcement by the Islamist president of the retirement of Field Marshal Hussein Tantawi, who ruled Egypt for more than a year after the ouster of veteran strongman Hosni Mubarak, showed his determination to stamp civilian control on an old guard of officers with whom he had been in conflict.

To do so, he took advantage of the previously well-hidden rivalries between the 78-year-old Tantawi and a younger generation of generals, but was careful to ensure that both Tantawi and his number two on the Supreme Council of the Armed Forces, chief of staff General Sami Anan, were given an honourable exit.

"Morsi's decision to bring down Tantawi and Anan shows that in reality the SCAF was powerless, that it was a paper tiger," leading columnist Ibrahim Eissa wrote in the Al-Tahrir newspaper.

Such a lightning strike against the SCAF leadership, unthinkable even a week ago, "ultimately proved easier than putting out a cigarette," Eissa said.

Political analyst Gamal Salama said it was difficult to envisage any fightback by the sidelined generals.

"Even if Tantawi and Anan wanted to put up a fight, mobilise the troops and reject the decision, I think it highly unlikely given the way events have unfolded," said Salama, head of the political sciences department of the University of Suez.

"Both men received Egypt's highest honour and were named presidential advisers, which provides reassurance even if it is only an honorary post," he said.

Three other SCAF members -- navy chief Vice Admiral Mohab Mamish, air defence chief Lieutenant General Abdelaziz Saif al-Din and air force chief Air Marshal Reda Mahmud Hafez -- were given senior civil service posts.

Mamish was made head of the Suez Canal Authority, one of Egypt's top revenue earners.

Other SCAF members were given government posts, notably intelligence chief Lieutenant General Abdel Fattah al-Sissi, who was named defence minister in place of Tantawi.

Many newspapers highlighted the generational jump at the expense of the old guard involved in the appointment of Sissi, in his 50s and the youngest member of the SCAF.

Several papers recalled that in June last year Sissi was accused by a commentator close to military circles of being a closet member of the Muslim Brotherhood, the long banned group on whose ticket Morsi successfully stood for the presidency. The accusation was denied by the SCAF on its Facebook page.

Another SCAF member General Mohamed el-Assar was named deputy defence minister.

The appointments "suggest some sort of prior agreement between the president and some SCAF members," to reshuffle the top brass and sideline Tantawi, said Mustafa Kamel el-Sayyed, political analyst at Cairo University.

A military source cited by the state MENA news agency on Sunday said the appointments had been made "in coordination, and after consultation, with the military."

Kamel el-Sayyed said that the August 5 raid by Islamist militants in the Sinai, in which 16 Egyptian soldiers were killed when their post near the Israel and Gaza borders was attacked, had weakened the old guard's position.

"This attack hurt the prestige of the high command and created fertile ground for a reshuffle," he said.

Morsi already fired then intelligence chief Major General Murad Muwafi the day after the attack.