By Andrew Gray

BRUSSELS (Reuters) -European Union foreign policy chief Josep Borrell has proposed adding 3.5 billion euros ($3.85 billion) to a fund used to finance military aid for Ukraine, EU sources said on Wednesday.

The sources, speaking on condition of anonymity, said Borrell had asked EU governments to raise the financial ceiling on the European Peace Facility (EPF), a fund that has already allocated some 4.6 billion euros in military aid for Ukraine.

"He's just made the proposal," a European diplomat said.

Borrell's proposal requires approval from the EU's national governments. They agreed last December that, "in case of need", such an increase could be justified.

The fund, established in 2021, was conceived for the EU to help developing countries buy military equipment. But the 27-member union quickly decided to use it also to get weapons to Ukraine after Russia's invasion in February last year.

The fund is separate from the EU's budget, which is not allowed to finance military operations.

But the fact that EU countries clubbed together to buy weapons and ammunition for a country at war with Russia marked a historic step for the bloc, which for decades avoided involvement in defence and military matters.

The war has meant that the EPF has burned through cash far more quickly than planned. It originally had a budget of 5 billion euros, meant to last until 2027. That ceiling has already been raised once, by 2 billion euros, last December.

The fund allows EU countries that supply weapons and ammunition to Ukraine to claim back a portion of the cost. EU countries contribute to the fund according to the size of their economies.

A senior EU official said Borrell had decided to ask for a boost as the fund was running low and the EU's foreign policy service wanted to be sure the EPF had enough cash to finance military aid for other countries as well as Ukraine.

"We have to top up," said the official. "The gist of the European Peace Facility ... has a universal character. It was not conceived by Ukraine. It was conceived for any conflict that the European Union could deal with."

($1 = 0.9084 euros)

(Reporting by Andrew Gray; editing by Grant McCool)