The Bush administration will provide $86.4 million to strengthen security forces loyal to Mahmoud Abbas, the Palestinian president, as part of a plan to expand US involvement in Abbas's power struggle with Hamas.
Fighting between Abbas's Fatah faction and Hamas, the ruling Islamist group, has surged since talks on forming a unity government collapsed and Abbas called for early parliamentary and presidential elections.
Hamas accuses Abbas of mounting a coup.
A US government document said on Friday: "The US money will be used to "assist the Palestinian Authority presidency in fulfilling its commitments under the road map (peace plan) to dismantle the infrastructure of terrorism and establish law and order in the West Bank and Gaza."
The document said Lieutenant-General Keith Dayton, the US security co-ordinator between Israel and the Palestinians, would implement the million-dollar programme "to strengthen and reform elements of the Palestinian security sector controlled by the PA presidency".
The US money will provide Abbas's presidential guard with training and non-lethal equipment, including vehicles and uniforms, people familiar with the US security plan said.
Israeli officials said Washington had already helped organise shipments of guns and ammunition to the presidential guard from Egypt and Jordan, and that the latest shipment was made last week. Clashes between armed units loyal to Hamas and Fatah have increased in recent days.
Six people were killed in factional fighting on Thursday alone. The money for the presidential guard was initially earmarked for US aid programmes in Gaza and the occupied West Bank, but those programmes were "cancelled or suspended after Hamas took power earlier this year," the US document said.
The US officials said the money would not be used to pay the salaries of members of the presidential guard. Abbas's presidential guard currently has about 3,700 members.
With aid from the US and its allies, Abbas hopes to expand it to 4,700 members in 12 to 18 months. Palestinian sources said the guard could grow into 10,000 members.
Hamas says its own "Executive Force" has nearly 6,000 members and will also be expanded. Hamas receives funding from Iran and other Islamist allies.