The supermarket giant is to take a three-month break to halt the roll out of any more stores and review the business.
The move has raised serious questions over Fresh & Easy's trading success so far, with rumours circulating that the US business missed internal sales targets.
US analysts have questioned whether American consumers are impressed by the format, which Sir Terry Leahy, Tesco's chief executive, has pledged will establish a significant presence in the US.
Tesco is insisting the start-up is on track and has earmarked £250m for investment in the Fresh & Easy brand.
Simon Uwins, marketing director of Fresh & Easy, laid out Tesco's reasons for freezing its US expansion on his company blog: "We've given ourselves a little bit of time to kick the tyres, smooth out any wrinkles, and make some improvements that customers have asked for.
"In nine months, we've gone from a project team of 200 people to a business employing nearly 2,500 people.
"We've learnt a huge amount about running the operation, and talked to thousands of customers about what they like about Fresh & Easy, and where they would like us to improve."
Uwins added that the roll-out of new stores would resume after the three-month review: "Improving the operation and the shopping trip is what we do every day... but the next three months will allow us to accelerate this process, before we restart what's been described as an opening programme on steroids."
However, in a research note released two weeks ago, Mike Dennis, a City analyst with Piper Jaffray, said that research among US suppliers had suggested first-half sales at Fresh & Easy could be $30m (£15m), compared with the $100m the City had expected. Dennis blamed the figure on "very weak" footfall.
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