International Development Secretary Justine Greening said that the UK was withholding £21 million of aid due to be paid to Rwanda next month.
Rebels in Democratic Republic of Congo have said today that they will withdraw from the city of Goma only if President Joseph Kabila agrees to their demands, which the government was quick to dismiss as a farce.
The deadlock raises the risk that the insurgency may turn into an all out war in a region affected by almost twenty years of conflict.
Rebels in the Democratic Republic of Congo (DRC) are set to withdraw from the eastern cities of Goma and Sake following negotiations in Uganda.
Colonel Sultani Makenga, the leader of the M23 group, is said to have accepted the demand without conditions.
Uganda's chief of defence forces, Aronda Nyakayirima, told Reuters: “We met last night and I communicated to him [Makenga] the decision of regional leaders reached on Saturday and he accepted to pull back his forces out of Goma and Sake and also stop any further advances southward.
"He didn't put up any conditions for pulling out because he agreed that all their grievances will be resolved in the ICGLR [Great Lakes] mechanism as stipulated in the declarations of the Saturday summit [in Kampala]."
African leaders urged the M23 on Saturday to end their aim of toppling the DRC government.
Thousands of civilians have been forced to flee as M23 rebels in the Congo consolidated their position in Goma.Read the full story ›
2012: The city of Goma is captured by troops from the rebel group M23, which is backed by Rwanda and Uganda, according to the UN.
2005 - 2011: Mutinies by soldiers claiming lack of pay and poor conditions, ongoing clashes between the Congolese army and FDLR rebels, occupation by Joseph Kony's LRA in the east, UN accusations of war crimes and mass rapes.
2003 - 2005: Under an interim government lead by President Kabila, the country sees repeated coup attempts, the arrival of UN troops, and fighting between rebel groups and soldiers in the east.
1998 - 2003: The second Congo war, fought at times between seven nations and many more militia groups, is said to be the deadliest since World War II.
In 2001 Joseph Kabila succeeded his father, who was shot dead by a bodyguard, as president.
1996 - 1997: The first Congo war, sparked by destabilisation caused by refugees from the Rwandan genocide, results in Laurent Kabila becoming president and renaming the country from Zaire.
The leader of the Democratic Republic of Congo's M23 rebel group Colonel Sultani Makenga is travelling to the Ugandan capital Kampala at the invitation of the head of the Ugandan military, a rebel spokesman said.
"He's on his way to Kampala, he has been invited by the military chief of Uganda," Amani Kabasha told Reuters by phone from an undisclosed location.
The Ugandan military could not be immediately reached for comment.