China has effectively put on hold a draft counterterrorism law that will require technology firms to hand over sensitive information to government officials, a senior U.S. official said.

Tensions over cybersecurity and technology policy are a major irritant in U.S.-China relations and President Barack Obama said in a March 2 interview that he had raised concerns about the law directly with Chinese President Xi Jinping.

"They have decided to suspend the third reading of that particular law, which has sort of put that on hiatus for the moment," White House Cybersecurity Coordinator Michael Daniel said Thursday, according to a webcast of a discussion at the Information Technology and Innovation Foundation.