However some US politicians were angered by the move and have threatened to block it in the US congress, saying that the jets would not help Pakistan's efforts in the so-called war on terror and could be used against India, the newspaper reported.

The news came before George Bush, the US president, is to meet Yousuf Raza Gilani, the Pakistani prime minister, on Monday for talks on the battle against the Taliban in neighbouring Afghanistan.

Aid shift

Perino said Pakistan was "facing a lot of pressure from a severe fiscal situation" stemming partly from soaring food and energy costs, and therefore "they need assistance from the United States".

Pakistan's military does not often use its F-16 fleet, which was built in the 1980s, in missions against Taliban and suspected al-Qaeda fighters in Pakistan's tribal regions, which border Afghanistan, because of fears of civilian casualties.

US state department officials told the newspaper that the upgrades would improve the fighters' ability to carry out accurate air strikes, reducing such casualties.

Last year, US congress specified that the funds made available to Pakistan be used for law enforcement or military operations.

In the original plan sent to US congress in April this year, the Bush administration planned to use $226.5 million of the aid to refurbish two of Pakistan's P-3 maritime patrol planes, buy new airfield navigation aids and upgrade its Cobra attack helicopters, the paper said.

However the state department told congress last week the administration had decided it wanted to apply those funds to the F-16s instead, the newspaper said.

In the 1980s Pakistan agreed to buy about 70 F-16s jets and received around 40 before US congress stopped aid and military sales over Pakistan's nuclear weapons programme.

Although Washington lifted the sanctions after the September 11 attacks, because of Pakistan's support for the so-called war on terror, the sale of the F-16s had remained on hold.

Pakistan has received around $9.6 billion in the six budget years since the September 11, 2001 attacks on the US, the US state department has said.

Peace deals criticised

Meanwhile Pakistan's ruling coalition leaders said on Wednesday they would not allow the country to be used as a staging post for "terrorism" or permit attacks by foreign forces on its territory.

Pakistani forces are battling the Taliban
in tribal areas [EPA] 
An official statement from Gilani and other leaders from the Pakistani coalition government agreed that the "main thrust'' of their strategy to counter extremism would be "political engagement of the people".

However the approach has been criticised by American and Afghan officials as Gilani's government 
is seeking peace deals with fighters through tribal elders in northwestern regions along the porous border area with Afghanistan.

US military commanders say they have seen a 40 per cent rise in attacks on parts of eastern Afghanistan since Pakistan's new government launched peace talks with Taliban rebels in the tribal region, thought to be where al-Qaeda leader Osama bin Laden is hiding, the AFP news agency reported.

Bush said earlier this month that he was "troubled" by the movement of fighters from Pakistan to Afghanistan and would discuss the threat with Gilani during his visit.