WASHINGTON, Jan 22 (Reuters) - The U.S. Senate on Tuesday approved legislation President George W. Bush is expected to sign into law that would exempt Iraq from lawsuits dating back to the regime of executed former President Saddam Hussein.

By a vote of 91-3, the Senate approved the measure that also authorizes U.S. military programs this year. The House of Representatives passed an identical bill last week.

Late last year, Congress approved a different version of the defense bill, which would have allowed lawsuits against Iraq, some dating back to the 1991 Gulf War in which U.S.-led troops expelled Iraqi soldiers from Kuwait.

The new Iraqi government complained that allowing those suits to go forward could tie up about $25 billion in Iraqi money at a time when the country is trying to rebuild following the 2003 U.S. invasion of that country.

The legislation would allow private lawsuits against Libya to still go forward, but only for actions it took while it was labeled a state sponsor of terrorism by the U.S. from 1979 to 2006.

The defense bill also authorizes a pay raise for U.S. troops, expands the size of the Army and sets conditions on the Bush administration's plan to build a missile defense system in eastern Europe.

The legislation also sets broad outlines for U.S. military priorities and directs weapons acquisitions. (Editing by Todd Eastham)

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