By Steve Kingstone BBC correspondent in Washington

The United States Senate has approved a $35bn increase in defence spending, paving the way for the biggest expansion of the US military in two decades.

President George W Bush had asked lawmakers for the extra funding to pay for his ongoing war on terror.

Subject to final approval, the overall defence budget for the next financial year will be more than $350bn.

President Bush has increased the budget deficit

America already spends more on defence than any nation in history.

Its military budget exceeds the combined spending of its nine closest competitors and now there is more on the way.

With little debate and by 95 votes to three, the Senate approved this package.

The money will pay for helicopters, cargo aircraft, four new warships and a replacement for the Crusader cannon, which is considered too heavy for modern warfare.

There is also a 4% pay rise for all defence personnel.

That represents almost everything on the president's military shopping list.

The only dissenting note was the decision by senators to withhold a $10bn wartime contingency fund, which Mr Bush would control.

That is perhaps a reminder to the White House that lawmakers will not be overlooked when it comes to the debate on possible military action against Iraq.

Ultimately though, Mr Bush can expect to get his contingency fund when the defence bill gets final approval from both houses of Congress in the autumn.