WASHINGTON, Nov 21: Both houses of the US legislature have approved a $388 billion budget that contains military aid programmes for Pakistan and Afghanistan.

A total of $300 million has been earmarked for Pakistan under an arrangement reached between President George W. Bush and President Pervez Musharraf when they met at the Camp David presidential resort in June 2003.

Overcoming last minute objections from various lobbies, the House of Representatives voted 344 to 51 on Saturday evening to pass the bill. Hours later, the Senate gave its approval, 65 to 30.

It is for the first time that a military assistance of $300 million for Pakistan has been allocated in the US budget. The move is seen here as an appreciation of the key role Pakistan plays in the war against terrorism.

The bill codifies the stingiest budget for domestic spending since the late 1990s. The austerity measures have been brought about by soaring budget deficits and the rising costs of war in Iraq and the fight against terrorism.

The US had a record budget deficit of $412 billion in the fiscal year that ended Sept 30. "This is a lean and clean package that adheres to the budgetary limits agreed to by Congress and the president," said Representative Bill Young, chairman of the House Appropriations Committee, describing the bill that will fund much of the US government in fiscal 2005.

"We have resisted many requests for additions to the package that would have busted the budget by billions of dollars," he added. Diplomatic observers say here that the US administration's decision to include $300 million in military assistance for Pakistan reflects new US strategic priorities.

While lobbying for the budget, senior administration officials told US lawmakers the fund for Pakistan will bolster capabilities of that country's armed forces that are helping the United States hunt down suspected Al Qaeda members along the Afghan-Pakistan border.

The allocation is also seen as an expression of confidence in President Musharraf who is often praised by the Bush administration for risking domestic tensions and the ire of the extremists for supporting the US-led campaign against terrorism.

Last week, the Bush administration notified Congress that it planned to provide a $1.3 billion dollar arms package for Pakistan, including eight P-3C Orion planes to beef up surveillance of its coasts and borders to stop the movement of terrorists and drug smugglers.

It would be the largest US foreign military sale to Pakistan since sanctions against Islamabad were lifted in late 2001 as a reward for supporting US forces fighting the Taliban and Al Qaeda forces in neighbouring Afghanistan. Besides the Orion surveillance planes, Pakistan also has requested 2,000 TOW-2A anti-armour guided missiles and six Phalanx Close-in Weapons Systems for its warships, according to defence officials.

Congress has 30 days to approve or reject the proposal but sources on Capitol Hill believe it will be easily adopted despite objections from pro-Indian lobbies.

The budget also contains $400 million for training and equipping the new Afghan national army, a $350-million increase of the past year. Israel, the leading American ally in the Middle East, got a $73 million increase in its military aid programme, to a total of $2.2 billion. Israel will also receive $360 million in economic assistance.

Egypt is offered $1.3 billion dollars for its military and $535 million for its economic needs. Fulfilling a US commitment to international anti-AIDS programs, lawmakers allocated $2.3 billion to combat the global AIDS pandemic as well as tuberculosis and malaria, a $690 million increase over fiscal 2004.

The counter-drug initiative for Latin America received $731 million, but the administration's request for other anti-drug programmes was cut by $30 million, to a total of $329 million.

Congress was expected to approve the budget in October but the passage was delayed by seven weeks. The US fiscal year begins from Oct 1. The government has been operating on a continuing resolution since then.