This is $60 million more than in 2004, according to a US State Department statement on Monday.

The increase is in line with a 1990s agreement which reduces economic assistance to Israel by $120 million a year, while adding $60 million a year to the military component of the package, the largest Washington gives to any country.

The statement said the Bush administration was committed to enhancing Israeli security and “maintaining Israel’s qualitative edge over any combination of adversaries”.

Apart from the annual military and economic assistance, Washington is also guaranteeing international loans to Israel up to an amount of $9 billion over three years.

The $9 billion is liable to deductions equivalent to the Israeli government’s spending on settlements in the occupied Palestinian territories, but the US has given Israel clearance to start borrowing before deciding how much it will deduct.

Egypt and Jordan, who have both signed peace treaties with Israel, receive $1.3 billion and about $225 million respectively in military aid from Washington annually.

Sharon’s blacklist

News of the package came as Israeli Prime Minister Ariel Sharon tried to persuade Russia's President Vladimir Putin to include Lebanon’s Hizb Allah and Palestinian resistance movements on Moscow’s list of so-called “terrorist” organisations.

Sharon (L) with Putin calls on
Moscow to expand 'terror'  list

An unnamed Israeli official made the statement on Monday during Sharon’s official three-day visit to Russia.

Hizb Allah spearheaded the movement in south Lebanon to oust Israeli forces in May 2000 after a 22-year occupation.

Palestinian groups Hamas and Islamic Jihad are currently leading the Intifada or uprising against Israeli occupation.

Washington includes all these organisations on a list of “terror” groups.

The Israeli premier also urged Putin to drop a Moscow-introduced motion for a UN resolution on the US-backed “road map” aimed at ending the Palestinian-Israeli conflict.

Israel feared UN backing for the plan would undermine Washington’s role in implementing the blueprint, said a senior Israeli official.

Sharon’s visit was partially aimed at forcing Moscow to admit that the “road map” was in doubt and that new solutions were needed to end the conflict.