(Reuters) - Israel is expanding the reach of its Iron Dome rocket interceptors to make do with fewer given the prospect of reduced financial support from a cash-strapped United States, a senior Israeli official said on Wednesday.

The U.S. Congress approved $205 million for Iron Dome in fiscal year 2011, which ended on Sept. 30, and President Barack Obama´s administration said on March 27 it would seek "an appropriate level of funding" for further acquisitions.

Israel has deployed three of the systems, which helped fend off Palestinian rocket salvoes during a flare-up in fighting around the Gaza Strip last month, and has spoken of needing 13 or 14 in total to protect its various fronts.

But a senior Israeli official said that full deployment could be reduced thanks to planned advances in Iron Dome, which uses small radar-guided missiles to blow up Katyusha-style rockets with ranges of between 5 km (3 miles) and 70 km (45 miles), as well as mortar bombs, in mid-air.

The official, who briefed a small group of journalists on condition of anonymity, predicted an increased interception range of up to 250 km, as well as more flexible aiming of Iron Dome units, which cost around $50 million each.

"You could post it in the Dan region (greater Tel Aviv area) and it would have enough range in either direction, both north and south," the official said, referring to Israel´s borders with Lebanon and Gaza, territories where Islamist guerrillas have sizeable rocket arsenals.

Iron Dome´s manufacturer, state-owned Rafael Advanced Defense Systems Ltd., said last month that the government had ordered seven units so far. The company is also developing David´s Sling, also known as Magic Wand, an interceptor designed to shoot down longer-range rockets and cruise missiles.

As a safeguard against enemy ballistic missiles of the kind held by Iran and Syria, Israel has also deployed Arrow, which carries out interceptions at atmospheric altitudes.

Like Iron Dome and David´s Sling, Arrow has been extensively underwritten by the United States, which is keen to show its support for Israel in the face of an Iranian nuclear programme that the Jewish state has described as a mortal threat.

The Israeli official anticipated that talks with the United States on a "new round" of missile-defence funding would be completed in two or three months.

While praising American largesse, the official said U.S. planners had asked Israel to "point out honestly where the upper limit is in terms of what can be implemented" with Iron Dome.

Summarising Washington´s message, the official said: "We don´t want to give money for the sake of it, we are deep in (fiscal) challenges ourselves." (Writing by Dan Williams; Editing by Alistair Lyon) (© Thomson Reuters 2012. 04/04/12)