The United States sealed a deal on Thursday to provide Israel with $30 billion in defense grants over the next decade, a 25 percent boost that Washington describes as strengthening a regional bulwark against Iran.

At a signing ceremony in Jerusalem, U.S. Undersecretary of State Nicholas Burns said the United States would help Israel maintain a military advantage over foes ranging from Iran and Syria to their proxies in Lebanon and Palestinian territories.

There is no question that, from an American point of view, 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. It's immediate and it's also long-term, Burns told reporters.

The United States faces many of the same threats from the same organizations and countries as Israel does, and so we felt this was the right level of assistance.

The Bush administration said last month that it would also offer weapons worth $20 billion to Saudi Arabia and other allied Gulf states. Egypt stands to get $13 billion in defense assistance over the next decade, similar to present levels.

The package -- which awaits approval in the U.S. Congress -- is designed to reassure Israel and Sunni Muslim Gulf nations of Washington's commitment to the Middle East despite its problems in Iraq, as well as to strengthen them in the face of the growing clout of Shi'ite Iran and its nuclear program.

Citing a need for regional stability, Saudi Arabia and Egypt are among Arab powers that have endorsed U.S.-led efforts to revive Israeli-Palestinian peace talks after Hamas, an Islamist group partly funded by Iran, violently took over Gaza in June.

PEACE PRIORITY

Burns said the new aid to Israel, which currently receives $2.4 billion in annual military grants, would not be conditioned on diplomatic progress or concessions though one of the major priorities for our government ... will be to help push forward a peace agreement between Israel and the Palestinians.

The United States, Burns said, considers this $30 billion in assistance to Israel to be an investment in peace, in long-term peace -- peace cannot be made without strength.

Israel overhauled its armed forces since suffering surprise setbacks in last year's war with Lebanese Hezbollah guerrillas.

Assumed to have the Middle East's only atomic arsenal, Israel has vowed to prevent Iran, its arch-enemy, from acquiring the bomb. Iran denies its nuclear program has military aims.

We have an exceptionally heavy defense burden, said Bank of Israel Governor Stanley Fischer, who officiated at the signing ceremony. The fact that the United States is willing to share a significant part of that burden ... is a critical element in the budget.

Israel is the only recipient of U.S. defense grants allowed to spent some of them -- 26.3 percent -- on domestic arms firms.

Israeli defense experts say the funds are vital for developing technologies that are used to upgrade U.S.-supplied weaponry and guarantee a qualitative edge. But there have been American objections to the idea of underwriting Israeli firms that could compete with U.S. counterparts in the global market.

An Israeli official said the Americans had initially wanted to cap the amount of U.S. assistance that may be spent on Israeli defense industries at $625 million a year, but eventually relented, agreeing to a fixed percentage.

Burns and Fischer said the sides had not finalized details on what weaponry would be supplied to Israel under the new deal.

(Additional reporting by Jeffrey Heller in Jerusalem)

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