"We give Israel more than $3 billion in aid every year, based on it being an important ally in the region and the only democracy in the Middle East," Efe news quoted Omar as saying at a news conference on Monday.
She was barred from entering Israel along with her colleague Rashida Tlaib last week.
"Denying a visit to duly elected members of Congress is not consistent with being an ally," she said.
"And denying millions of people freedom of movement or expression or self-determination is not consistent with being a democracy."
Omar demanded that the government of Israeli Prime Minister Benjamin Netanyahu "stop the expansion of settlements on Palestinian land and ensure full rights for Palestin if we are to give them aid".
She was referring to the military aid package for Israel of $38 billion over 10 years, which was approved by Congress in 2018 and is scheduled to run until 2028.
Israel blocked an official visit by Omar and Tlaib, the latter who is of Palestinian descent, after US President Donald Trump urged the Netanyahu government to do so in an unprecedented gesture.
Both Tlaib and Omar, the nation's first two Muslim-American women in Congress, support the non-violent Boycott, Divestment, and Sanctions (BDS) movement against Israel, which is highly controversial in the US, prompting all kinds of attacks from conservative and liberal pro-Israel activists and Zionist sympathizers.
Israel acceded to Trump's request and barred the two legislators from entering the country.
However, it later announced it would allow Tlaib to make a trip to visit her grandmother, who lives in the occupied West Bank, for humanitarian reasons, though the lawmaker was barred from making any comments critical of Israel or promoting BDS during the trip.
But Tlaib rejected those terms.
Tlaib and Omar, together with Alexandria Ocasio-Cortez and Ayanna Pressley, have formed a group of progressive freshmen members of Congress known as "The Squad", which has clashed with both Trump and the centrist Democratic Party establishment spearheaded by House Speaker Nancy Pelosi.
In July, the President accused them of hating the US and Israel and told them to return to the places they came from, even though three of the four were born on US soil.
( With inputs from IANS )