(Reuters) - For the first time, the U.S. Congress is attaching conditions to some money it is approving related to the Iraq war.

Congressional Democrats had been hoping to tie funding to timetables for withdrawing U.S. troops but they did not have enough votes to overcome President George W. Bush's opposition. Instead, a deal has been worked out to link reconstruction aid to progress in Iraq.

Here are some conditions in the version Congress is expected to approve:

* Bush will report to Congress by July 15 and September 15 on Iraq's progress toward meeting 18 "benchmarks" for progress. Those include Baghdad's implementation of legislation to fairly distribute oil revenues, taking steps to disarm militias and improving Iraqi security forces' ability to effectively operate without U.S. backup;

* U.S. funds for Iraqi reconstruction projects could be denied if Bush reports inadequate progress. Currently, about $1.6 billion (806 million pounds) would be at stake. But Bush could waive the restriction and provide the money even without adequate progress;

* The U.S. Comptroller General, by September 1, would submit to Congress an independent report on Iraq's progress in meeting benchmarks;

* The Defence Department would commission an independent assessment of Iraq's security forces' readiness to take responsibility for protecting the country and report to Congress within four months.