Qatar has fallen out with fellow US allies in the Gulf, led by Saudi Arabia and the United Araba Emirates, over its alleged support for militant groups and ties with Iran.

The United States is trying to broker an end to a Saudi-led diplomatic and economic embargo on gas-rich Qatar, and still maintains a huge air base of its own on its territory.

On Thursday, the State Department approved a plan for Qatar to spend $197 million upgrading the technology and logistics capabilities of the Qatari Emiri Air Force operations center.

A statement said the sale would help "the foreign policy and national security of the United States by helping to improve the security of a friendly country."

Qatar, it said, "has been and continues to be an important force for political stability and economic progress in the Persian Gulf region.

"Our mutual defense interests anchor our relationship and the Qatar Emiri Air Force plays a predominant role in Qatar's defense," it said.

The deal underlines the balancing act that Washington is performing in the Gulf as it tries to end in-fighting between Arab monarchies while maintaining a common front against Iran.

Three minutes after issuing a statement approving the Qatar deal, the State Department also approved a $270 million deal to sell Sidewinder air-to-air missiles to the United Arab Emirates.

And, using near identical language as before, it described the UAE as "a friendly country" and "an important force for political stability and economic progress in the Middle East."

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut all diplomatic and trade ties with Qatar last June, closing its only land border and banning all flights to and from the emirate.

Qatar denies claims that it supports Islamist extremist groups, but fellow Gulf monarchies remain annoyed that it hosts the outspoken Al-Jazeera satellite network and has warmer ties with Iran.

President Donald Trump initially took the Saudi side in the dispute, but the US military relies on Qatar for its biggest base in the region and American diplomats have sought to reconcile the parties.