The US Senate followed House of Representatives to pass the Act with an overwhelming majority yesterday.
The Act will now be sent to President Barack Obama to sign into law.
The Act proposes to freeze some USD 700 million American aid to Pakistan unless the Departments of State and Defense provides a certification that Islamabad has taken steps to curb the flow of explosives that goes into the making of the impoverished explosive devices in Afghanistan.
Impoverished explosive devices (IEDs) is one of the major cause of deaths of American soldiers in Afghanistan.
Congressmen and Pentagon official says that the raw materials for these IEDs come from Pakistan, in particular its fertilisers factories, and Pakistan is not taking enough steps to curb their flow into Afghanistan, which is being used by the Taliban and other extremist groups against US-led international forces there.
The White House had said on Wednesday that Obama will sign the bill.
Meanwhile, the Obama Administration yesterday came out strongly stating that the defence spending bill passed by the Congress does not freezes US aid to Pakistan and said that Pak media has been misreporting on this issue.
"What this piece of legislation requires is that the administration make certain certifications as to how our general relationship with Pakistan is going in certain categories in order to release the money," the State Department spokesperson, Victoria Nuland, told reporters at her daily news conference.
Nuland said,"But this is not about cutting funding or freezing funding. We're working on setting the funding levels with the Congress. It is about imposing on the administration certain certification requirements before we would release the money that the Congress would give.
"This is very similar to procedures that we have on other kinds of money for countries around the world. These are certification requirements. In addition, I would say that, you know, they usually include some kind of waiver authorities for the Secretary.
"I'd also like to say this in no way impinges on Pakistani sovereignty. There have been some strange assertions in the Pakistani press which are inaccurate."
Asked what happens when such a certification is not made, Nuland said, "Well, if we can't certify that we're making progress, then we have to work with the Congress on what portion of the money would or wouldn't go."
The USD 670 billion authorisation bill sets spending levels at the Department of Defense for the fiscal year 2012.
The Senate passed the bill by 86-13, while the House of Representatives had approved the bill 283-136 on Wednesday.
The bill in its final form as passed by both the House and the Senate, limits the amount of funds available for the Pakistan Counterinsurgency Fund (PCF) until the Secretary of Defense provides Congress a strategy on the use of the PCF and on enhancing Pakistan's efforts to counter the threat of IEDs.
"As to Pakistan, the conference report limits to 40 per cent the amount of the Pakistan Counterinsurgency Fund that can be obligated until the Secretary of Defense provides Congress a strategy on the use of the Fund and on enhancing Pakistan’s efforts to counter the threat of improvised explosive devices (IEDs)," said Senator Carl Levin, Chairman of the Senate Armed Services Committee, on the Senate floor.