WASHINGTON, April 18 (Reuters) - The U.S. government would have greater power to prosecute cases of fraud in contracts for the wars in Iraq and Afghanistan under a measure introduced in Congress on Friday.

Senate Judiciary Committee Chairman Patrick Leahy, a Vermont Democrat, and Sen. Charles Grassley, an Iowa Republican, said the bipartisan legislation would update a World War Two-era law against contracting fraud to ensure that it applies to U.S. military actions in Iraq and Afghanistan.

The lawmakers said billions of dollars have been awarded to contractors who have delivered defective products to U.S. troops in the two countries.

Congress approved resolutions that allowed President George W. Bush to use military force in those countries, but never officially declared war against them.

Leahy and Grassley said that as a result, the 66-year-old law addressing U.S. statutes of limitations on contract fraud during times of war does not apply to Iraq and Afghanistan.

Current law suspends statutes of limitations during declared wars and then gives the government up to three years after the war has ended to prosecute cases of contracting fraud.

The legislation would extend the law to cover officially undeclared conflicts and give the government up to five years after the end of hostilities to prosecute fraud cases.

"It's a common-sense reform that's good for taxpayers and good for public confidence that war contracting is not a free-for-all with no criminal accountability," Grassley said in a statement. (Reporting by Donna Smith; Editing by Xavier Briand) (donna.smith@reuters.com; 202-898-8391;Reuters Messaging: donna.smith.reuters.com@reuters.net))

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