"I hereby designate the Islamic Republic of Pakistan as a major non-NATO ally of the United States for the purposes of the act and the Arms Export Control Act," Bush said in a statement released by the White House.

The decision, announced as the president made a rally-the-troops speech on Iraq here, means Pakistan is joining an exclusive club of countries that enjoy a privileged security relationship with the United States.

Its members, which include Argentina, Australia, Bahrain, Egypt, Israel, Japan, Jordan, Kuwait, Morocco, New Zealand, the Philippines, South Korea and Thailand, are granted significant benefits in the area of foreign aid and defense cooperation. India, Pakistan's nuclear rival, is not among them.

Major non-NATO allies are eligible for priority delivery of defense material and the purchase, for instance, of depleted uranium anti-tank rounds.

They can stockpile US military hardware, participate in defense research and development programs and benefit from a US government loan guarantee program, which backs up loans issued by private banks to finance arms exports.

However, the designation does not afford them the same mutual defense guarantees enjoyed by members of the North Atlantic Treaty Organization (NATO).

The step, an apparent reward for Pakistan's support of the global war on terrorism, comes despite ongoing US concerns about nuclear proliferation conducted by Pakistani scientist Abdul Qadeer Khan.

And it came as the official probe into the September 11, 2001 terrorist attacks on the United States faulted Pakistan as having "significantly facilitated" al-Qaeda mastermind Osama bin Laden's stay in Afghanistan.

The commission investigating the attacks said Pakistan had helped the Taliban militia in Afghanistan to harbor bin Laden before the US war to overthrow that Islamist regime in late 2001.

The commission also said Pakistan broke with the Taliban only after September 11, 2001, even though it knew the militia was hiding bin Laden, whom the United States already sought for terrorist attacks on embassies in Africa.

"The Taliban's ability to provide bin Laden a haven in the face of international pressure and UN sanctions was significantly facilitated by Pakistani support," said the report.

"Pakistan benefitted from the Taliban-al-Qaeda-relationship, as bin Laden's camps trained and equipped fighters for Pakistan's ongoing struggle with India over Kashmir."

Pakistan has become a key US ally since the war on terrorism was launched in the wake of the September 11 attacks. It dropped its support for the Taliban, allowed US troops to use its air bases and intelligence for the campaign to oust the Taliban and arrested more than 500 al-Qaeda fugitives.

Islamabad was rewarded for its immediate cooperation with the lifting of US sanctions -- which dated back as far as 1990 -- on military cooperation, training and sales.

Since 2001, the US military has resumed bilateral defense talks with Pakistan, along with some training and limited hardware sales.

WAR.WIRE