Australia is moving towards a potential diplomatic stoush with Russia as the Federal Government backs away from a proposed deal for the use of Australian uranium.

Prime Minister Kevin Rudd said yesterday the West's relations with Russia were at a turning point after its intervention in Georgia and the pact to sell Australian uranium to Russia was in the balance.

Mr Rudd was speaking at a press conference after the issuing of a parliamentary committee report that recommended against ratification of the treaty that would provide for the sale of Australian uranium to Russia's civil nuclear power industry. Labor backbenchers on the Parliament's Joint Treaties Committee have urged the Government to impose eight additional stringent conditions on Russia, including the separation of Russia's civil and military nuclear facilities and the resumption of International Atomic Energy Agency inspections of facilities that will take Australian uranium.

In effect, the committee has rejected the treaty that was signed last September by the Howard government, and would reportedly facilitate uranium sales worth $1billion a year.

Mr Rudd said Russia was posing ''a very difficult challenge'' for international security.

''Obviously the global situation in relation to the Russian Federation is now complex as a result of what we have seen in Georgia and most particularly in Southern Ossetia,'' he said.

''We'll be working closely with international governments on the best response to the Russians.''

Labor committee members had expressed fears Russia could use Australian uranium as part of its nuclear weapons program, though Coalition senators issued a dissenting report saying the Nuclear Non-Proliferation Treaty provided adequate safeguards against Russia's use of uranium for military use.

The committee report is largely the work of Labor chairman Kelvin Thomson, and comes despite furious last-minute lobbying by the Russian ambassador, Alexander Blokhin.

The ambassador called on Mr Thompson for an hour and a half on Wednesday morning. Other committee members later described the ambassador's approach as ''angry'' and '' pretty undiplomatic''.

While the Russian embassy had ''no official comment'' on the report, Mr Blokhin had previously warned any delay in Australian ratification would be regarded by the Russian Government as ''an obviously politically biased decision'' with adverse implications for the bilateral relationship.

The committee's recommendations and the Government's reconsideration are a blow to the Department of Foreign Affairs and Trade, which argued strongly in favour of the treaty, telling the committee it would bring commercial benefits to Australia and help Russia reduce its greenhouse gas emissions through an expansion of its civilian nuclear industry.