AUSTRALIA could join a queue of nations lining up to cash in on uranium exports to India, despite the Rudd Government previously ruling out sales unless the Indian Government signs the Nuclear Non-Proliferation Treaty.

In a policy backdown, Foreign Minister Stephen Smith told Indian journalists last week that the ban on uranium sales could be overturned if a long-awaited agreement between India and the US was finalised.

"We have made this clear to Indian officials that we are bound by (Labor) party policy," Mr Smith said. "But if the 123 agreement is passed by the Indian parliament, we could consider joining a consensus."

His comments appear to contradict one of the first major international rulings of the Rudd Government: the dumping of a deal brokered by the Howard government to export uranium to India once it signed the US agreement.

Mr Smith's comments, reported in the Times of India last week, also are at odds with Labor's clear pre-election promise of not selling uranium to India unless it signs the non-proliferation treaty — a vow repeated by senior ministers as recently as two weeks ago.

The newspaper article also claimed Australian officials had shown a "thawing" of their stance against uranium sales to India — which has a stockpile of nuclear weapons — during a meeting of the Nuclear Suppliers Group in Berlin last month.

The promise to ban uranium exports to India and an attack on the Howard government's plan to explore nuclear power as an option to combat global warming, allowed Labor to run an effective anti-nuclear campaign before the 2007 federal election.

But Mr Smith's comments now cast doubt on the Government's conviction over the issue. At the very least, they suggest Australia would be unlikely to use its veto powers to quash any deal between India and the US negotiated through the 45-member Nuclear Suppliers Group, representing uranium exporters, or the International Atomic Energy Agency.

That means Australia could find itself in the diplomatically, economically and rhetorically difficult situation of rubber stamping an agreement allowing international exports of uranium to India, while continuing to maintain that exports should not be allowed because of India's failure to sign the treaty.

The US agreement would allow countries to supply nuclear power generation technology and fuel to the potentially lucrative Indian market, despite it not being a treaty signatory. Russia and France are especially keen to sell nuclear technology to India. The pact would bring Indian reactors under the International Atomic Energy Agency inspection regime, allowing regular monitoring of its power stations.

After quashing the Howard government's deal with India earlier this year, Mr Smith said: "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."

Resources Minister Martin Ferguson has also been clear on the issue. In a recent speech to the Australian Uranium Association, he said the Government's position was "non-negotiable".

"We will only allow the sale of Australian uranium to countries which observe the Treaty on the Non-Proliferation of Nuclear Weapons and which have a bilateral safeguards agreement with Australia," Mr Ferguson said.

The so-called 123 agreement — a reference to section 123 of the US Atomic Energy Act of 1954 — passed through US Congress in December 2006. India has so far failed to sign, with communists on whom the ruling Congress coalition depends claiming that it would undermine Indian sovereignty.

But analysts believe India's growing dependence on nuclear power means the agreement will inevitably pass through the Indian parliament.

Rory Medcalf, director of the international security program at the Lowy Institute, said he believed "in the long run Australia will find a way of selling uranium to India".

"This would require a changed context of Australia-India relations on the non-proliferation front, for example a treaty to ban the production of fissile material or a regime for nuclear weapons restraint in Asia," he said.