To be presented to Obama's top national security advisers in the next week or two, the review is expected to contain several options, including telling Pakistan's military that if it wants billions of dollars in American aid will depend on the military's being reconfigured to effectively fight militants.
That proposal suggests that roughly 10 billion dollars in military aid provided to Pakistan as 'reimbursements' for its contribution to the global war on terror, has largely been wasted.
The payments have been the source of increasing criticism on Capitol Hill and from independent review groups, which have concluded that Pakistan diverted much of the money to build up its forces against India.
Revamping the aid to the military was part of a three-month study of what has gone wrong in the seven-year war along the Afghanistan-Pakistan border.
The study calls for a new and broadly regional approach to insurgencies that move freely across the mountainous border between Afghanistan and Pakistan.
In the short term, it calls for continued covert strikes into Pakistani territory from Afghanistan, though the American military has been reluctant to repeat the kind of ground attack that led to an open exchange of fire with Pakistani border forces in September.
Obama is likely to be urged to take a far more regional approach to the problems in Pakistan and Afghanistan, something he has indicated in speeches he is inclined to do.