British Finance Minister Gordon Brown flew into Iraq for the first time on Saturday and pledged an extra 100 million pounds ($188 million) to help rebuild the country.
Brown was on a surprise visit to British troops in southern Iraq and trying to boost his credentials to take over from Prime Minister Tony Blair sometime over the next year.
"What I'm saying today is we could provide an extra 100 million pounds over the next three years to help with the economic regeneration programme," Brown told reporters.
Travelling with Britain's chief of the armed forces Sir Jock Stirrup, Brown will meet Iraqi deputy prime minister Barham Salih and other senior officials on his visit to the region.
He said earlier: "We are committed to supporting the Iraqis in building a democratic nation which brings security and prosperity to its people and plays a full part in the region and the world economy."
Britain was part of the US-led invasion of Iraq in 2003 to topple Saddam Hussain. It has 7,200 troops in southern Iraq, mostly stationed in and around Basra. But the city remains dangerous with Shia factions battling each other for control and British troops occasionally caught in the middle.
The visit is the latest initiative by Brown to widen his brief beyond his Treasury portfolio as he looks closer than ever to succeeding Blair.
Bowing to pressure from within his own Labour partly because of the unpopularity of the Iraq war, Blair has said he will leave office within a year but he is widely expected to go around May.
Brown is the clear favourite to take over but may still face an uphill election battle against a resurgent opposition Conservative party led by the relatively youthful David Cameron.
An election is still probably some three years away but the ruling Labour party, in power since 1997, is trailing the Conservatives in the polls as anger over the handling of the Iraq war and financial scandals have hit the government.
The government last month announced that troops who serve for six months in Iraq and Afghanistan will receive a tax-free bonus of 2,240 pounds to help bring pay more in line with their US counterparts.
The head of the army, Sir Richard Dannatt, caused a political storm when he said the presence of British troops in Iraq was exacerbating the security situation on the ground and they should be withdrawn soon.
He also criticised the post-invasion plan by the US-led coalition.