UPDATE 1-US to supply Pakistan with 85 mini-drones

* Drone order comes despite US-Pakistan tensions

* Talks on a separate drone order in final phase

* Cooperation on Afghan border never better-Mullen (Adds comments, details)

By Phil Stewart

ISLAMABAD, April 21 (Reuters) - The United States will provide Pakistan with 85 small "Raven" drone aircraft, a U.S. military official told Reuters, a key step to addressing Islamabad's calls for access to U.S. drone technology.

The official, speaking on Thursday on condition of anonymity, declined to disclose the cost of the non-lethal, short-range surveillance aircraft, which are manufactured by the U.S.-based AeroVironment Inc (AVAV.O).

A company spokesman said the Raven is used by U.S. allies including Italy, Spain and Norway and is one of the most widely utilised unmanned aircraft in the world.

The disclosure is another sign of growing U.S. military assistance to Pakistan, a crucial if often tense ally in the U.S. fight against al Qaeda and insurgents attacking U.S. forces in neighbouring Afghanistan.

Pakistan is expected to receive roughly $3 billion in U.S. military aid in the upcoming fiscal year.

On Wednesday, Admiral Mike Mullen, chairman of the U.S. military's Joint Chiefs of Staff, accused the country's intelligence agency of a having a longstanding relationship with Haqqani militants targeting U.S. forces in Afghanistan.

The White House said in a report to Congress released this month Pakistan lacked a robust plan to defeat Taliban militants, and noted its security forces are struggling to hold areas cleared of the al Qaeda-linked fighters at great cost.

Still, U.S. military officials also praise increased efforts by Pakistan's military over the past several years in tackling some insurgents and say cooperation at a tactical level on both sides of the Pakistan-Afghanistan border is greatly improved.

"It represents a level of coordination that is better than it's ever been," Mullen told reporters.

SHADOW DRONES?

The Raven, according to the company website, has a wingspan of just 1.4 metres (4.5 feet) and a weight of 1.9 kilos (4.2 pounds). It can deliver real-time colour or infrared imagery, giving troops on the ground an edge on the battlefield.

A senior U.S. defence official, also speaking on condition of anonymity, said the Raven drone order is separate from U.S. plans to offer Pakistan much larger, longer-range surveillance drones, a proposition put forward by U.S. Defense Secretary Robert Gates during a visit to Pakistan in January 2010.

That offer delighted Islamabad at the time but Pakistani officials say those talks have been held up over complaints about the cost proposed by Washington and a slow timeline for delivery.

The U.S. defence official suggested those talks were nearing conclusion.

"We're in final discussions about which one they really want. They think they want the Shadow," the senior U.S. defence official said.

Gates had originally offered Pakistan 12 Shadow drones, manufactured by AAI Corporation, a unit of Textron Systems (TXT.N).

They are not the weaponised versions being used by the CIA to track and kill al Qaeda and Taliban insurgents in Pakistan but are used strictly for surveillance and intelligence gathering.

(Editing by Sophie Hares)