The United States sealed a deal on Thursday to provide Israel with $30 billion in defense grants over the next decade.
The aid deal represents a 25 percent rise in U.S. military aid to Israel, from a current $2.4 billion each year to $3 billion a year over 10 years.
Nicholas Burns, the U.S. undersecretary of state for political affairs, and Israeli Foreign Minister Director-General Aharon Abramovitz signed the memorandum of understanding on the assistance at a ceremony in Jerusalem .
The package was meant in part to offset U.S. plans to offer Saudi Arabia advanced weapons and air systems that would greatly improve the Arab country's air force. Israel has said it has no opposition to the U.S. aid to Saudi Arabia.
Burns said regional threats to Israel — Iran and the Hezbollah and Hamas militant groups — also threaten the United States.
"We look at this region and we see that a secure and strong Israel is in the interest of the United States," Burns said.
The chief of Israel's central bank, Stanley Fischer , said the U.S. aid is of "critical importance" to Israel, whose defense budget constitutes about 10 percent of its Gross Domestic Product.
The aid package to Israel was finalized in June in Washington between President Bush and Israeli Prime Minister Ehud Olmert. Olmert has said the increase in military aid to Israel would guarantee its strategic superiority, despite upgrades to Arab countries in the region.
The U.S. has long-standing commitments to Israel and to Egypt , which in 1979 became the first Arab state to make peace with Israel. Egypt currently gets $1.3 billion a year in military assistance. At the same time, the U.S. is seeking to strengthen other moderate Mideast allies, largely as a counterweight to Iran's growing influence.
The United States and Israel accuse Iran of developing nuclear bombs, a charge Tehran denies. Iran, whose leader has repeatedly called for Israel to be to wiped off the map, is viewed by Israel as its main enemy. Shiite Muslim Iran also concerns the Saudis and other Sunni-led Arab allies of the United States.