TEL AVIV - Israel and the United States signalled on Sunday they were putting disputes over the Iran nuclear deal behind them, announcing resumed talks on US defence aid for Israel as it hosted Washington's top general and a joint air force drill.

The allies had been looking to agree on a 10-year military aid package to extend the current US grants to Israel worth $3 billion annually, which are due to expire in 2017. But Prime Minister Benjamin Netanyahu froze those negotiations ahead of the July deal reached between Iran and world powers, which Israel deems insufficiently stringent and against which it had lobbied the US Congress. "With the nuclear deal now moving ahead, Israel is also moving ahead, hoping to forge a common policy with the United states to address the continuing dangers posed by Iran," Ron Dermer, Israel's ambassador to the United States, said in a Facebook post.

"Discussions over a new Memorandum of Understanding between Israel and the United States, which had been on hold for some time, resumed this past week in Washington," he said, using a term for the defence-aid agreement.

The most senior US military officer, Joint Chiefs of Staff chairman Marine General Joseph Dunford, arrived in Israel on Saturday in his first foreign trip since assuming the post on Oct 1.

Israel also launched, at a southern desert base, a two-week air force drill with the United States known as "Blue Flag".

The exercise, held twice a year, "creates a multi-national learning environment, including fictional countries, in which participants can practice planning and execution of large air force operations," the Israeli military said in a statement. It said other countries were involved, but did not name them.

Dermer said Dunford's visit would include defence-aid discussions that would be pursued in Defence Minister Moshe Yaalon's talks in Washington later this month and at a White House meeting between Netanyahu and President Barack Obama on Nov. 9.

Affirming the strength of ties, Dunford appeared to play down past disputes between the United States and Israel.

"Through all of the ups and downs in a family relationship, the military-to-military relationship has remained strong," he told Yaalon at the Defence Ministry in Tel Aviv.

"The challenges that we face, we face together," Dunford said, after Yaalon listed Iran as Israel's chief regional adversary. "I know the perspective that you have will be very important to us in making sure that what we do, we do most effectively."

Before the suspension, the two sides were close to a new package of grants worth $3.6 billion to $3.7 billion a year, US and Israeli officials have said. They have predicted that the amount could rise further as Israel argues that it needs more aid to off-set a likely windfall for Iran in sanctions relief which might be used to finance anti-Israel guerrillas.

"Israel hopes that the discussions we are now engaged in will culminate in a long-term agreement that will dramatically upgrade Israel's ability to defend itself by itself against any threat and enable Israel to address the enormous challenges we now face in the region," Dermer said.