The initial award was worth 34.6 million dollars, but it provided for funding of up to 680 million dollars over 18 months subject to Congressional approval, the US Agency for International Development (USAID) said.

San Francisco-based Bechtel was given the job of emergency infrastructure repair and rehabilitation.

"Restoration of the country's key infrastructure is a priority of the US government's effort to strengthen Iraq's economy and ensure delivery of essential public services to the Iraqi population," USAID said in a statement.

Under the deal, the largest of eight Iraqi reconstruction contracts, Bechtel is to repair, rehabilitate or reconstruct vital elements of Iraq's infrastructure.

The doling out of contracts to US companies for the rebuilding of Iraq has unleashed an international and domestic furore.

Halliburton, a company once run by US Vice President Dick Cheney, had pulled out of the bidding for the contract amid the controversy, US press reports here said.

The Houston-based oil services company, which Cheney ran for five years until 2000, was one of five US firms invited by the Bush administration to put in a tender for the contract.

Senior Democrats had already cried foul after the US military gave an Iraqi oil well firefighting contract to Halliburton subsidiary Kellogg Brown and Root (KBR) without bidding.

The European Commission also has said it is examining Washington's handout of contracts to rebuild Iraq to see whether the process complies with World Trade Organization (WTO) rules.

Brussels has said there are grounds for concern that companies based in the European Union are being frozen out of the lucrative rebuilding of roads, airports and oil terminals.

USAID unleashed criticism in Britain when it gave one contract worth 4.8 million dollars (4.5 million euros) to rebuild Iraq's only deep-water port at Umm Qasr -- secured and controlled by British troops -- to Stevedoring Services of America.

Under the latest contract, Bechtel is required to assess and repair power generation facilities, electrical grids, municipal water systems and sewage systems.

The deal includes a provision for the rehabilitation or repair of airport facilities, and the dredging, repair and upgrading of the southern Iraqi port city of Umm Qasr.

The contract may also involve responsibility for the repair and reconstruction of hospitals, schools, ministry buildings and major irrigation structures, as well as restoration of essential transport links.

Bechtel was expected to work subcontractors on some tasks and to "engage the Iraqi population", USAID said.

"The capital construction contract is part of USAID's planned reconstruction assistance to the Iraqi people, aimed at helping maintain stability, ensure the delivery of essential services, and facilitate economic recovery," the government agency said.

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