(Corrects to Prime Minister from President in paragraph 2)

By Sue Pleming

WASHINGTON, May 25 (Reuters) - The United States delivered plane loads of ammunition to Beirut on Friday as the U.S. Congress agreed on $770 million in new funds for Lebanon, of which more than a third is for military aid.

The U.S. aid boost for Lebanon is part of the Bush administration's strategy to bolster moderate Prime Minister Fouad Siniora and his security forces, with Friday's ammunition delivery targeted to fight Islamist militants.

"What the Lebanese are doing right now is trying to bring law and order and establish a rule of law in Lebanon and that is something that is in the interests of everyone," State Department spokesman Tom Casey said.

The ammunition was delivered following a request from Siniora's government for urgent help to fight the al-Qaeda affiliated group Fatah al-Islam in a Palestinian refugee camp in northern Lebanon.

At least 33 soldiers and 25 militants have been killed in what is the worst internal violence since the 1975-1990 civil war in Lebanon.

Casey did not have specific details on the ammunition delivery but security sources in Lebanon said at least six U.S. and Arab military supply planes arrived at Beirut airport carrying ammunition and other light equipment from U.S. depots in the region and from Jordan and the United Arab Emirates.

Middle East expert Shibley Telhami said the battle with Fatah al-Islam was a perfect opportunity for the United States to provide military supplies to the Lebanese government without being seen as interfering in domestic politics and the battle against Syrian-backed Hezbollah.

"This (Fatah al-Islam) is an isolated group and in principle it is opposed by almost everyone," said Telhami of the University of Maryland.

The United States has provided about $45 million in military aid to Lebanon over the past year.

Late on Thursday, Congress approved a budget request of $770 million in aid for Lebanon, with $280 million of that earmarked for military assistance. This is in addition to $230 million agreed on last year for Lebanon, bringing U.S. aid until the end of this year to $1 billion.

BOOSTING AID

"This funding reflects a substantial increase in economic, humanitarian and security assistance to Lebanon," said State Department spokesman David Foley. In recent years, annual U.S. aid to Lebanon totalled about $50 million.

The $770 million was announced last January at a donors conference for Lebanon in Paris. Of that amount, some $250 million will go toward debt relief and $50 million will be for legislative and judicial programs, as well as to improve schools and other projects, Foley said.

In addition, Foley said the Bush administration had notified Congress of its intent to use an additional $30.6 million to support Lebanon's armed forces.

The aid to Lebanon is part of an overall strategy by the Bush administration to boost moderate Arab leaders in the region. A similar aid package has been given to Palestinian President Mahmoud Abbas to bolster his presidential guard and to counter the militant group Hamas.

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