The United States Senate has approved a tripling of civilian aid to Pakistan, as part of the effort to undermine the country's Islamic insurgency.

The $US1.5 billion in annual funding includes money for schools, the judicial system, parliament and law enforcement agencies.

The bill, which also includes hundreds of millions of dollars in annual military aid, was passed as Pakistan's military prepares for a fresh offensive against forces loyal to Pakistani Taliban leader Baitullah Mehsud.

The House of Representatives passed its version of the legislation in mid-June, and the two chambers must now approve a compromise bill before President Barack Obama can sign the measure into law.

Militants

The Senate action comes as an aid group says inadequate assistance is allowing militant groups to operate in camps and communities.

The settlements house hundreds of thousands of Pakistanis displaced by an offensive against the Taliban.

Refugees International says a slow pace of international assistance is creating a vacuum that is being filled by Jihadist groups.

Last month, aid officials said members of a Pakistani Islamist charity on a UN watch list were helping the displaced.