US PRESIDENT Donald Trump says the United States will impose sanctions on NATO ally Turkey over a detained American pastor held on terror and espionage charges.

Shortly after the possibility of sanctions was first announced by Vice President Mike Pence, Mr Trump wrote on Twitter that the US “will impose large sanctions on Turkey for their long time detainment of Pastor Andrew Brunson.”

Mr Pence’s initial announcement of possible sanctions came at the close of a three-day conference on religious freedom.

Mr Brunson, 50, an evangelical Christian pastor originally from North Carolina, was let out of jail on Wednesday, after a year and a half, to serve house arrest because of “health problems,” according to Turkey’s official Anadolu news agency.

“Brunson is an innocent man, there is no credible evidence against him,” Mr Pence said.

Mr Trump has repeatedly demanded Mr Brunson’s release and said on Twitter last week that the pastor’s detention was “a total disgrace.”

One of Mr Brunson’s lawyers is Jay Sekulow, who also represents Mr Trump in the Russia investigation.

If convicted, Mr Brunson faces up to 15 years in prison for “committing crimes on behalf of terror groups without being a member,” references to outlawed Kurdish militants and the network of a US-based Muslim cleric blamed for a failed coup attempt.

He could receive another 20 years if he is found guilty of espionage.

Mr Brunson strongly denies the charges.

Mr Pence’s announcement was delivered at a conference on religious freedom in Washington. Secretary of State Mike Pompeo also spoke at the conference.

Mr Pence highlighted cases of religious repression in Nicaragua, Iran, China and Myanmar. He also condemned Islamic State group violence toward religious minorities and what he described as rising anti-Semitism in western Europe.

Secretary Pompeo announced additional aid for a region of Iraq previously held by the Islamic State group.

Sec. Pompeo said the department would provide $US17 million ($A23 million) for demining efforts in Nineveh, an area of Iraq historically home many of Iraq’s religious minorities.

Ties between NATO allies Turkey and the United States have been strained by the pastor Brunson case.

Turkish President Recep Tayyip Erdogan has previously linked Mr Brunson’s return to the US to the extradition of cleric Fethullah Gulen, the cleric Turkey’s government holds responsible for the failed July 2016 military coup.

Gulen, who denies orchestrating the coup attempt, lives in Pennsylvania.

Turkish requests for his arrest and extradition have not been granted.

At the end of a recent hearing, the court inside a prison complex in western Turkey rejected Mr Brunson’s lawyer’s request that he be freed pending the outcome of the trial.

The case was adjourned until October 12.