Rice prices almost doubled in the impoverished nation due to shortages caused by floods and a devastating cyclone last year that created a food crisis, and this year's bumper harvest has failed to bring down prices.
Hundreds of thousands of poor Dhaka residents queued daily in front of 75 stores run by the Bangladesh Rifles (BDR), the country's main paramilitary force, to buy subsidised rice.
But the BDR said it stopped selling the cheap rice on Friday.
"The BDR can no longer sell subsidised rice in Dhaka as the government has stopped providing subsidies," BDR Dhaka command chief Colonel Mujibul Haq said. "We've asked for the subsidy to continue. But the government said no. They told us not to sell subsidised rice," Haq said.
The Dhaka stores will now sell rice at the market rate of 30 taka (44 cents) a kilogram (2.2 pounds), up from the subsidised rate of 25 taka, he said.
No comment was immediately available from the government, which has distributed cheap food to tens of millions of poor people to try to address what one former minister has described as a "silent famine."
But with annual food inflation running at 12 per cent, many poor Bangladeshis say the price hikes have forced them to get by on just one meal a day.
Some subsidised rice was still available at government distribution outlets in the southern cyclone-hit part of the country.
The government has forecast a winter harvest of 18 million tonnes, over two million tonnes more than last season's yield, and the government says this will alleviate food shortages in the country.
But millers and traders have been hoarding supplies in expectation of a rise in prices later in the year, local newspapers say.