U.S. President Barack Obama. Thomson Reuters

The United States and Israel have agreed on a record $38 billion package of U.S. military aid and will sign the new pact on Wednesday (September 14), enshrining defense funding for Washington's closest Middle East ally for the next decade, officials said.

The deal will represent the biggest pledge of U.S. military assistance made to any country but also involves major concessions granted by Israeli Prime Minister Benjamin Netanyahu, according to officials on both sides and U.S. congressional aides.

Those include Israel's agreement not to seek additional funds from Congress beyond what will be guaranteed annually in the new package, and to phase out a special arrangement that has allowed Israel to spend part of its U.S. aid on its own defense industry instead of on American-made weapons, the officials said.

Israel's chief negotiator, Jacob Nagel, acting head of Netanyahu's national security council, arrived in Washington in preparation for the signing ceremony, and the White House also began briefing members of Congress on the deal.

Nearly 10 months of drawn-out aid negotiations have underscored continuing friction between President Barack Obama and Netanyahu over last year's U.S.-led nuclear deal with Israel's arch-foe Iran, an accord the Israeli leader opposed.

The United States and Israel have also been at odds over the Palestinians.

U.S. President Barack Obama and Israel's Prime Minister Benjamin Netanyahu shake hands at a joint news conference at the Prime Minister's residence in Jerusalem, March 20, 2013. Larry Downing/Reuters

But the right-wing Israeli premier decided it would be best to forge a new arrangement with Obama, who leaves office in January, rather than hoping for better terms from the next U.S. administration, according to officials on both sides.

A deal now allows him to avoid uncertainties surrounding the next president, whether Democrat Hillary Clinton or Republican Donald Trump, and to give Israel's defense establishment the ability to plan ahead.

Obama's aides want a new deal before his presidency ends, seeing it as an important part of his legacy.

Republican critics accuse him of not being attentive enough to Israel's security, which the White House strongly denies, and of taking too hard of a line with the Israeli leader.

Israel has long been a major recipient of U.S. aid, mostly in the form of military assistance against a backdrop of an ebbing and flowing conflict with the Palestinians and Israel's neighbors, as well as threats from Iran.