The US has agreed to provide Israel with $30bn in defence grants over the next decade, a 25 per cent boost aimed at countering a "resurgent" Iran and its allies.
At a signing ceremony in Jerusalem on Thursday, Nicholas Burns, US undersecretary of state, said the US would help Israel to maintain a military advantage over its enemies.
Burns said these enemies include Iran and Syria to groups within Lebanon and the occupied Palestinian territories.
He added that the "Middle East is a more dangerous region now even than it was 10 or 20 years ago and that Israel is facing a growing threat."
"The United States faces many of the same threats from the same organisations and countries as Israel does, and so we felt this was the right level of assistance."
A statement from the office of Ehud Olmert, the Israeli prime minister, who met the US envoy on Wednesday, said the deal "illustrates the depth of the relationship between the two countries."
The agreement represented "the commitment of the United States to the defence of Israel and preserving its qualitative superiority," the statement said.
Gulf arms deal
The aid deal will raise the US defence aid given to Israel from $2.4 billion to $3 billion a year over 10 years.
|Israel has pledged to stop Iran developing |
nucelar weapons [AFP]
The Bush administration said last month that it would also offer weapons worth $20 billion to Saudi Arabia and other Gulf states.
Egypt stands to get $13 billion in defence assistance over the next decade, similar to present levels.
The package - which awaits approval in the US Congress - is designed to reassure Israel and Gulf nations of Washington's commitment to the Middle East despite its problems in Iraq.
It will also well as to strengthen them in the face of the growing power of Iran and its nuclear programme.
Israel has been overhauling its armed forces since it suffered setbacks in last year's war against Hezbollah fighters in Lebanon.
It is the only recipient of US defence aid allowed to spent some of the money - 26.3 per cent - on its domestic arms industries.
The rest must spent using US defence suppliers.
Israeli officials say the funds are vital for developing technologies that are used to upgrade US-supplied military hardware and guarantee a "qualitative edge".
Assumed to have the Middle East's only atomic arsenal, Israel has vowed to prevent Iran acquiring the bomb.
Iran denies its nuclear programme has military aims. "We have an exceptionally heavy defence burden," said Bank of Israel Governor Stanley Fischer, Burns's co-signatory.
"The fact that the United States is willing to share a significant part of that burden ... is a critical element in the budget."
Burns and Fischer said the sides had not finalised details on what weaponry would be supplied to Israel under the new deal.