WASHINGTON (Reuters) - The Bush administration told Congress on Friday of plans to sell Iraq about 400 million rounds of small arms ammunition, 170,000 grenades, demolition explosives and other military gear and services valued at up to $508 million.

The Pentagon’s Defense Security Cooperation Agency said the Iraqi government had asked for up to 100 million rounds of both M855 5.56mm and 7.62mm ammunition for small arms, as well as about 200 million other bullets.

“This proposed sale directly supports the Iraqi government and serves the interests of the Iraqi people and the U.S., as well as offering hope for a more stable and peaceful Middle East,” said the agency that handles government-to-government arms sales.

The package would help Iraqi forces “sustain themselves in their efforts to bring stability to the country and prevent overflow of unrest into neighboring countries,” a statement said.

In a previous proposed sale to Iraq, the Pentagon said on December 7 it would supply trucks, trailers and related equipment valued at up to $463 million. It said that would support a plan by Prime Minister Nuri al-Maliki to train and equip an extra 30,000 Iraqi troops. The strengthened Iraqi force is aimed at speeding up the departure of U.S. troops who ousted President Saddam Hussein in 2003.

The notice of a proposed sale is required by law. Congress has the power to reject it. The deal could be worth up to $508 million if all options are exercised.

As part of the proposed package, the United States would sell 170,000 40mm HEDP grenades, 80,000 C-4 1-1/4 pound plastic explosive packets and 4.2 million feet of detonating cord.

The deal would also involve up to 75 million gallons (341 million liters) of diesel, 2.9 million gallons (13 million liters) of JP-8 jet fuel and 56.4 million gallons (256 million liters) of motor gasoline, the statement said.

The administration, in a separate notice to lawmakers, proposed to sell to Turkey Raytheon Co.-built AIM-9X Sidewinder air-to-air missiles and related gear valued at up to $71 million if all options are exercised.