The US Defence Department has confirmed that it quietly investigated reports of unexplained phenomena in the air under a program that operated from 2007-12 inside the Pentagon, The New York Times reports.

The so-called Advanced Aerospace Threat Identification Programme spent AU$31 million a year investigating reports of unidentified flying objects.

The newspaper attributed the creation of the program to Nevada senator Harry Reid, who led the Democratic faction in the upper chamber for 12 years from 2005 until January, when he retired from Congress.

0:00 A video shows a 2004 encounter near San Diego between two Navy F/A-18F fighter jets and an unknown object. 00:00 / 00:00 Share Share on Twitter

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The left-leaning Democrats gained a majority in the Senate after winning the 2006 congressional elections.

Most of the program's $US22 million a year - within the US military budget of some $US600 billion - went to Bigelow Aerospace, based in Reid's home state of Nevada.

The firm, which continues to hold federal contracts including with US space agency NASA, is owned by billionaire Robert Bigelow, whom the Times described as a friend of Reid.