Washington DC - President Donald Trump's administration is set to cancel all remaining federal contracts with Harvard University, severing about $100 million in funding.

Days after President Donald Trump threatened to withdraw $3 billion in grants from Harvard University, a draft letter to federal agencies obtained by the New York Times reveals that contracts may be cancelled as early as Tuesday.

The administration has already frozen about $3.2 billion in grants and contracts in the last months.

"Going forward, we also encourage your agency to seek alternative vendors for future services where you had previously considered Harvard," the letter reads.

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The cuts will affect scientific and medical research undertaken by Harvard, one of the world's top universities both academically and in terms of research, as well as highly important training programs.

Cancelled contracts will even include those considered critical to the US, but agencies will be given a chance to find alternatives before the money dries up.

Trump has waged an all-out war on Harvard University, which has refused to submit to government control over admissions and hiring.

The Trump administration has also been seeking to detain and deport students who have protested against Israel's US-backed mass killing campaign in Gaza.

Last week, Harvard University moved to sue the Trump administration for trying to ban foreign student, and accused Washington of trying to undermine the First Amendments rights of its students and staff.

As a result of the suit, Massachusetts district judge Allison Burroughs ordered the Trump administration to immediately allow the university to process new foreign enrollments.

"It is the latest act by the government in clear retaliation for Harvard exercising its First Amendment rights to reject the government's demands to control Harvard's governance, curriculum, and the 'ideology' of its faculty and students," the lawsuit claims.