James Pardew, US special representative for Military Stabilisation in the Balkans, said details of the controversial funding would be made available at a conference in Ankara, Turkey, on Friday.
Several European countries have voiced unease over the US "train and equip" project, saying that it risked sending the wrong messages and undermining a regional disarmament drive.
"We want to reduce weapons in Bosnia," Mr Pardew said, but added that a second way of spreading security was to "improve the quality of a future federation force".
He dismissed European worries, saying the training and equipment would only be available to the federation, the fragile entity on which the long-term success of the Dayton peace accord rests.
He added that a military balance would help ensure that the peace accord lasted beyond the end of the year when Nato's 60,000-strong Implementation Force (I-For) left the country, but admitted US policy was based on "a gamble with the federation". He accepted that the federation has yet to create a defence ministry or merge the rival Croat and Muslim armies.
Meanwhile, in Sarajevo, Bosnian Serb police set fire to their station, fired pistols in the air and threw hand grenades in a drunken departure from the suburb of Ilidza yesterday.
Civilians ducked behind cars and French Nato troops crouched with weapons ready as a line of cars full of raucous Serb police drove around the town centre waving a Serb flag.
Muslim firemen from nearby Hrasnica, escorted by Nato, quickly put out the station fire.
Other fires also burned in Ilidza, one of two Sarajevo suburbs yet to be transferred from Serb to Muslim-Croat control under the terms of the Dayton accord.