US Defense Secretary Mark Esper visited the island nation last week and accused Beijing of "ongoing destabilising activities" in the Pacific.

Palau President Tommy Remengesau later revealed he told Esper the US military was welcome to build facilities in his country, an archipelago about 1,500 kilometres (930 miles) east of the Philippines.

"Palau's request to the US military remains simple -- build joint-use facilities, then come and use them regularly," he said in a letter to the US defence chief that his office released this week.

The note, addressed to Esper and marked "by hand delivery, Koror. Palau," said the nation of 22,000 was open to hosting land bases, port facilities and airfields for the US military.

Remengesau also suggested a US Coast Guard presence in Palau to help patrol its vast marine reserve, which covers an area of ocean the size of Spain and is difficult for the tiny nation to monitor.

While Palau is an independent nation, it has no military and the US is responsible for its defence under an agreement with Washington called the Compact of Free Association.

Under the deal, the US military has access to the islands, although it currently has no troops permanently stationed there.

"We should use the mechanisms of the Compact to establish a regular US military presence in Palau," Remengesau said.

"The US military's right to establish defense sites in the Republic of Palau has been under-utilised for the entire duration of the Compact."

He said bases in Palau would not only increase US military preparedness but also help the local economy, which is struggling as the Covid-19 pandemic has halted tourism, its main industry.