A federal Labor MP in the Northern Territory says he may challenge his party over a proposed nuclear waste dump, as environmentalists say the facility is illegal.

Damian Hale won the Darwin-based seat of Solomon at the last election by just 196 votes.

Mindful of his ultra-thin 0.2 per cent margin, the former footy coach unsuccessfully challenged his party room caucus on Tuesday over a plan to store Australia's radioactive waste in the Northern Territory.

"If occasionally, you come up and stand on your dick over an issue, I'm prepared to do that," the backbencher told reporters in Canberra. "I haven't had any people come to me and say, `Look, a nuclear waste dump is a good result for the Northern Territory'."

Muckaty Station, north of Tennant Creek, is firming as the leading site to store medical isotope waste from Sydney's Lucas Heights nuclear reactor. But Mr Hale said science showed the site was unsuitable. "I'd like to see Muckaty Station ruled out altogether," he said.

"The area is prone to tremors and seismic activity. "When we get our monsoonal rains ... a lot of water runs down through that area."

The proposed waste dump spot is 900km south of Darwin. Still, the issue ignites passion in a marginal electorate, which often bases its political judgment on whether a party respects the rights of territorians.

The Howard government retained Solomon at the 2004 election after its then environment minister Ian Campbell promised Northern Territory voters they would not be hosting a nuclear waste dump.

In the lead-up to the last election, Labor criticised the Howard government's 2005 Commonwealth Radioactive Waste Management Act for considering Muckaty Station.

Now in government, Labor, too, is considering Muckaty Station, 120km north of Tennant Creek and within the safe ALP seat of Lingiari.

It is in negotiations with the Ngapa traditional owners. Asked if Muckaty was the only site under consideration, Resources Minister Martin Ferguson said he would look at other voluntary sites from around Australia if he considered it to be inappropriate.

Earlier, Mr Ferguson told ABC Radio the three Northern Territory sites selected by the Howard government - Fishers Ridge, Mt Everard and Harts Range - would not be pursued, despite "the fact that scientifically they actually stack up".

The minister is scheduled to introduce a bill into parliament on Wednesday to replace the Howard government's radioactive act with the National Radioactive Waste Management bill.

He said the federal government needed to find a site so Australia's waste could be stored when it was brought back from Scotland and France in 2014 and 2015.

Unlike previous Northern Territory members in Canberra, Mr Hale says he won't cross the floor.

Nuclear waste dump 'illegal'

Australian Conservation Foundation nuclear free campaigner Dave Sweeney is calling on the federal government to start its site identification process afresh, after it was revealed only one nuclear dump site is being considered.

“Every state and territory in Australia has laws preventing the establishment of a nuclear waste dump so moves to open up a ‘national voluntary site nomination process’, where marginalised communities bid to host a nuclear dump, are not only ethically questionable but face serious legislative barriers", said ACF nuclear campaigner Dave Sweeney.

“Anything less than full repeal of the Commonwealth Radioactive Waste Management Act and a site selection process that is open, transparent and consultative would be inconsistent with Labor’s 2007 election pledges and would continue the Howard Government approach to nuclear waste and Indigenous communities.

“It is time for a fresh start and an open and responsible process from the Federal Government,” he said.

Indigenous communities 'not properly consulted'

Greens nuclear spokesman Scott Ludlam, who led a 2008 senate inquiry into the Act, criticised the government for negotiating with the Ngapa people through the Northern Land Council, to the exclusion of other indigenous groups.

Mr Ferguson said a decision about the Muckaty site would not be made until the proper processes had been completed.

"(Repealing the Act) includes putting back in place normal procedural requirements, scientific assessments, the operation of the Environmental Protection and Biodiversity Act and also having proper regard for the Northern Territory Aboriginal Land Rights Act," he told ABC Radio.