Meantime, amid simmering fears of a new Middle East war, Russia says it is supplying Syria with MiG-29 fighters, along with air-defense and anti-tank weapons.
The Russian disclosure, made after a landmark visit to Damascus by Russian President Dmitry Medvedev, incensed Israel, which accused Moscow of stoking unrest in the region.
But as far as can be determined, Moscow has not signed any new arms contracts with Damascus. The MiG-29s, the Pantsir short-range air-defense missile system and the other weapons listed all apparently relate to existing contracts.
Nonetheless, the Israeli reaction reflected the deep unease across the Middle East.
This stems from the Iran-U.S. confrontation over the Tehran regime's controversial nuclear program, the U.S. withdrawal from Iraq and the threat of renewed sectarian bloodletting and Israel's growing alarm that it faces missile attacks from Iran and its allies on an unprecedented scale.
Israel has accelerated its drive to establish a three-tiered air-defense system that can protect the country, particularly its population centers, against all calibers of missiles and rockets. Iron Dome is part of that plan.
The Israelis have been pressing the Obama administration to fork up more funds for Iron Dome for some time, despite the acrimonious rift between the U.S. president and Israel's hard-line prime minister, Binyamin Netanyahu.
The Israeli Defense Ministry only budgeted for two batteries of Iron Dome, developed by state-owned Rafael Advanced Defense Systems.
But the ministry has found it will need at least a dozen more to ensure all-round protection against a sustained missile and rocket onslaught.
Singapore is reported to have contributed toward the funding of Iron Dome's development on the premise that it would buy the system once it was available for export. But that clearly has not been enough to rescue the Israelis.
Despite the tension between Israel and the United States over Obama's demand all settlement activity be frozen to allow peace talks to resume, the Americans have pledged they will go on providing military aid.
The $205 million that Obama has approved will be over and above the $3 billion a year that Israel gets in U.S. military aid. Each Iron Dome battery costs $25 million.
The extra U.S. funding "is a breakthrough," the daily Haaretz quoted a senior Israeli defense official as saying, "which will significantly facilitate moving forward with the project.
"The question of funding has been, up until now, the main obstacle."
Pentagon spokesman Bryan Whitman said the $205 million marks the first direct U.S. investment in Iron Dome, which became operational in January.
It could be years before the system is fully deployed, but Israeli officials say that an initial deployment at a few key locations could begin later this year.
If hostilities erupt, many of the projectiles that are likely to be fired at Israel will be short-range Katyusha and Grad rockets that have been used extensively by Hezbollah in Lebanon and Hamas in the Gaza Strip.
These are the rockets that Iron Dome is designed to counter.
During Hezbollah's 34-day war with Israel in 2006, the Iranian-backed movement unleashed nearly 4,000 rockets against Israel, which had no defenses against such weapons.
But now, the Israelis claim, Hezbollah possesses some 45,000 rockets and missiles, including weapons that can hit Tel Aviv.
Obama approved the funding after U.S. military chiefs studied Iron Dome's test-firings and were impressed by the system. But the system has come in for some fierce criticism by Israeli analysts.
One of the most vociferous is Reuven Pedatzur, a leading military analyst and former fighter pilot. He was highly critical of the missile defense shield at an April security conference in Tel Aviv.
He described the claims of several speakers that Iron Dome can protect Israel from a massive missile bombardment on all fronts as "false and disingenuous."
He declared: "Iron Dome is a scam. The flight time of a Qassam rocket to Sderot (a southern town constantly hit by Hamas rockets) is 14 seconds, while the time the Iron Dome needs to identify a target and fire is something like 15 seconds.
"This means it can't defend against anything fired from fewer than 5 kilometers; but it probably wouldn't defend against anything fired from 15 kilometers either."