EXCLUSIVE-UPDATE 1-GE, Rolls F-35 engine deliveries said delayed

* Delay blamed on funding issues

* Lack of testing time on engine another factor

* Pentagon says no decision yet on buying the engines

(Adds further Pentagon comment, detail on testing of both engines, congressional activity)

By Andrea Shalal-Esa

WASHINGTON, Nov 10 (Reuters) - Deliveries of an alternate F-35 fighter engine being built by General Electric Co (GE.N) and Rolls-Royce Group PLC (RR.L) will be delayed by one year, a source familiar with the program said on Tuesday.

That may be bad news for the team, which is fighting to maintain funding for the second engine for the $300 billion Lockheed Martin Corp (LMT.N) F-35 fighter despite opposition by the White House and Pentagon. In October, the GE-Rolls team was forced to halt testing of its developmental engine until January 2010 when a loose nut damaged turbine blades.

"The entire F136 delivery plan has slipped a year," the source, who was not authorized to speak on the record, told Reuters.