The package would help Iraqi forces "sustain themselves in their efforts to bring stability to the country and prevent overflow of unrest into neighboring countries," a statement said.

It said the Iraqi government had asked for up to 100 million rounds of both M855 5.56mm and 7.62mm ammunition for small arms, as well as about 200 million other bullets.

It said the equipment would support a plan by Prime Minister Nuri al-Maliki to train and equip an extra 30,000 Iraqi troops.

The strengthened Iraqi force is aimed at speeding up the departure of US troops who ousted President Saddam Hussein in 2003.

In a previous proposed sale to Iraq, the Pentagon said on December 7 it would supply trucks, trailers and related equipment valued at up to $463 million.

The notice of a proposed sale is required by law. Congress has the power to reject it. The deal could be worth up to $508 million if all options are exercised.