A new non-singular analytical theory for the motion of near Earth satellite orbits with the air drag effect is developed in terms of the Kustaanheimo and Stiefel (KS) uniformly regular canonical elements, by assuming the atmosphere to be oblate diurnally varying with constant density scale height. The series expansions include up to third-order terms in eccentricity and c (a small parameter dependent on the flattening of the atmosphere). Only two of the nine equations are solved analytically to compute the state vector and change in energy at the end of each revolution, due to symmetry in the equations of motion. Numerical comparisons of the important orbital parameters semimajor axis and eccentricity up to 1000 revolutions, obtained with the present solution, with the third-order analytical theories of Swinerd and Boulton and in terms of the KS elements, with respect to the numerically integrated values, show the superiority of the present solution over the other two theories over a wide range of eccentricity, perigee height and inclination.