THE Rudd Government yesterday vetoed selling uranium to India while it was not a signatory to the Nuclear Non-Proliferation Treaty.

Foreign Minister Stephen Smith announced the decision after talks with India's visiting nuclear envoy, Shyam Saran.

In his first face-to-face meetings with the new Government, Mr Saran wanted to clarify whether Australian uranium sales were still possible, but the answer was a polite no.

Mr Smith reiterated Labor's longstanding policy on uranium in what were described as friendly talks held in Perth.

"We went into the election with a strong policy commitment (that) we would not export uranium to nation states who are not members of the Nuclear Non-Proliferation Treaty," Mr Smith told reporters, adding Mr Saran was unsurprised by the decision.

Opposition Leader Brendan Nelson said last night India was a very good friend of Australia and a very stable democracy with a voracious appetite for energy.

At the heart of the Government's decision is India's continued refusal to accept a ban on nuclear testing.

Fears were also raised that any decision to proceed with uranium sales to India would trigger bids from other countries who are not signatories to the NPT.

After initially refusing to sell India uranium, in August last year the Howard government agreed to overturn the ban subject to strict conditions that it be used for power generation only.

It followed a decision by the US overturning a longstanding ban on the sale of nuclear technology to India. This has since fallen victim to Indian politics, with the communists in the ruling Congress Party threatening to walk over what is viewed as an attack on India's sovereignty.

It was also seen as a move by former prime minister John Howard - an unrepentant nuclear energy advocate - to bolster his credentials as a promoter of clean energy.

Under the terms of the deal, Australian nuclear inspectors would have been allowed to check that uranium was being used only for peaceful purposes and was not being diverted for nuclear weapons programs.

India declared itself a nuclear power in 1998, but under the NPT only countries that detonated atomic devices before the treaty was drawn up in 1967 - the US, the Soviet Union, Britain, France and China - can be members of the nuclear weapons club.

There are 184 other countries party to the NPT. Only three nations besides India have not signed the treaty - Pakistan, Israel and North Korea - all of whom have nuclear weapons.

Labor only last year dropped its opposition to a policy limiting uranium mining to three mines, but reiterated its opposition to selling India uranium in the run-up to the November 24 election, which it won in a landslide.

In line with the new Labor policy, South Australian Premier Mike Rann last week gave permission for the nation's fourth uranium mine, the $50 million Honeymoon project 400km northeast of Adelaide.

Australia possesses about 40per cent of the world's known reserves of uranium and exports the nuclear fuel to 36 countries.

India, the world's largest democracy, has a flourishing nuclear energy program but its uranium resources are limited.

In March last year, Indian Prime Minister Manmohan Singh urged a visiting Mr Howard to overturn its ban.

"We would like to trade with Australia in all areas - we are short of uranium," Dr Singh said. "We would very much like Australia to sell uranium to India."

Responding to the decision in Canberra yesterday, Environment Minister Peter Garrett said Labor's stated position before the election on the sale of uranium remained unchanged.