Rice said that the package included no military aid and that it was not yet time to look at military assistance to Georgia.

The first tranche of $570m is set to be delivered by the end of 2008 and the rest by a new US administration that takes over in January 2009.

"We are also confident that the United States will keep a commitment that has strong bipartisan support for a second phase of support, an additional $430 million," said Rice.

She said Russia was not achieving its objectives through its actions in Georgia and that Georgian democracy was "thriving".

It was not immediately clear whether any of the package would require congressional approval.

But aid to rebuild Georgia already enjoys broad bipartisan support on Capitol Hill.

Cheney visit

Rice's announcement came as Dick Cheney, the US vice president, said during a visit to Azerbaijan on Wednesday that his country has a strong interest in the security of its allies in the region.

Cheney, centre, arrived in Baku ahead of visits to Georgia and Ukraine [AFP]
Speaking in Baku, the country's capital, Cheney said: "President Bush has sent me here with a clear and simple message for the people of Azerbaijan and the entire region: The United States has a deep and abiding interest in your well-being and security."

Cheney, whose trip comes in the shadow of the recent fighting between Russia and Georgia, is also due to visit Tbilisi, Georgia's capital, and Ukraine as part of a tour of the Caucasus.

The vice president said that the US believed it must work with Azerbaijan on increasing energy export routes out of the country.

He said: "The United States strongly believes that together with the nations of Europe, including Turkey, we must work with Azerbaijan and other countries in the Caucasus and Central Asia on additional routes for energy exports that ensure the free flow of resources."

Russian stranglehold

Azerbaijan, Georgia and Ukraine, which are all former Soviet republics, are increasingly wary of Russian intentions after its conflict last month with neighbouring Georgia

Azerbaijan pumps nearly one million barrels a day of high quality crude, equivalent to about one per cent of the world's oil supplies, through a BP-led pipeline that passes through Georgia and Turkey to Europe.

However, it has said that it is re-routing some of its production to a rival route through Russia, citing the conflict in Georgia as part of the reason.

Azerbaijan pumps nearly one million barrels a day of oil to Europe [EPA]

Ukraine and Georgia have both angered Moscow by seeking membership of the Nato military alliance.

Tbilisi, which was backed by the US during the fighting, has been weighing its next move in its relations with Russia which may include cancelling a lucrative civil nuclear deal.

Meanwhile, the US and the European Union are attempting to break Moscow's stranglehold on the transit of central Asian gas to Europe with the planned Nabucco pipeline which will pass around Russia's southern flank.

'Political corpse'

Cheney's visit to a region that Russia sees as its backyard has brought renewed attacks from the Kremlin.

Russia accuses Washington of helping to trigger the recent conflict by backing what it says is a pro-Western Georgian government bent on aggression.

Dmitry Medvedev, Russia's president, said it was time for the US to re-evaluate its policy of supporting Mikheil Saakashvili, Georgia's president.

Medvedev described the US-educated lawyer as a "political corpse" and said Moscow wanted nothing to do with him.

The president's remarks contrasted with the more conciliatory language he used about the EU, which on Monday threatened to suspend talks on a partnership pact but rejected sanctions on Russia, the bloc's biggest energy supplier.