According to Israeli political sources on Monday, the special funding would be used to house 9000 evacuated Jewish settlers in underpopulated areas of Israel.
   
"This is our biggest aid request in my memory - which is hardly surprising given the unprecedented scale of the Disengagement Plan," a senior Israeli political source said.
   
Israel's Haaretz daily, which first reported the request, said it would be formally submitted by Prime Minister Ariel Sharon's top aides to US National Security Council official Elliot Abrams in a meeting scheduled for Monday evening.

Aid uncertain
   
The Bush administration has agreed in principle to help fund the Gaza plan, Haaretz said. Washington wants the withdrawals to consolidate a five-month-old truce and spur talks on a US-led road map for a Palestinian state alongside Israel.

But Israel is already among the largest recipients of US aid, getting around $2.8 billion annually. Much of the funding comes in the form of grants that are spent on imports from the US military.

And the normally robust Israeli-US defence ties have been shaken in recent months by Pentagon anger at Israel's sale of advanced weaponry to China. Israeli Defence Minister Shaul Mofaz is due to make a fence-mending visit to Washington next week.

Israel is preparing to wall off
an entire section of Jerusalem

The Bush administration has also voiced misgivings about Israel's construction of a vast separation barrier through the West Bank, fearing it could imperil future talks with the Palestinians.

Israel's cabinet on Sunday approved a section of the barrier that would separate 55,000 Palestinian residents of East Jerusalem from the city centre.
 
And although Sharon casts the pullout as "disengagement" from almost five years of fighting with the Palestinians, he faces mounting hostility from far-rightists who condemn the move as a betrayal of Jewish claims on biblical land and a reward for Palestinian resistance to occupation.
   
Counting the cost

The cost of the Gaza withdrawal, the first time Israel will have uprooted settlements from occupied land Palestinians want returned for a state, is estimated at $1.74 billion.
   
The Israelis evacuated from Gaza's 21 settlements and from another four West Bank settlements are eligible for relocation funds, and have been encouraged by the government to move to the underdeveloped Galilee and Negev regions.

But Sharon has said this will require heavy investment in new infrastructure.
 
Including the costs of withdrawal, Israel has set a budget deficit target of 3.4% of gross domestic product - still above the 3% it had promised the United States in order to win $9 billion in local guarantees from 2003.
   
The government has allocated costs as an addition to the state budget and will spread them over three years to keep the deficit from rising significantly.
   
While welcoming any Israeli withdrawals, Palestinians suspect Sharon plans to leave them tiny Gaza while cementing Israel's hold on swathes of settlements in the West Bank.