During a meeting with Clinton, Gilani called on the US to mediate "between Pakistan and India on core interests i.e. Kashmir (and) water issues as well as help Pakistan enhance its defence capability to maintain balance of power," said a statement issued by the premier's office.

Meanwhile US President Barack Obama today signed a USD 680-billion defence budget bill that provides USD 2.3 billion military assistance to Pakistan with tough condition to make sure that the funds are not squandered or diverted to affect the "balance of power in the region".

Obama said the Defence Authorisation Bill for 2010 eliminates some of the waste and inefficiency in the defence process that will better protect the nation, troops and save taxpayers tens of billions of dollars.

"The bill includes a commitment to the stability of Afghanistan and Pakistan, expanded programmes to keep nuclear weapons out of the hands of rogue states and terrorists, and a reformed system of defence acquisition to save taxpayer money," said House Majority Leader Steny H Hoyer.

The military aid money to Pakistan for the fiscal 2010 as mentioned in the bill has two major components -- USD 1.6 billion for the Coalition Support Fund and USD 700 million for the Pakistan Counterinsurgency Capability Fund.

For the USD 1.6 billion Coalition Support Fund, the bill would require that, before any more such money is spent, the Obama administration must certify that doing so is in the US national interest and will not adversely affect the region's balance of power.

India feels that the American assistance to Pakistan should be more focused on building counter-insurgency capabilities rather than conventional defence equipment which can be diverted for other purposes.