The Northern Territory Government has decided to oppose moves to establish a uranium mine on the Angela Pamela deposit near Alice Springs.

Resources company Cameco is leading a project to explore the potential of the site, about 20 kilometres south of the town.

The project has been strongly opposed by environmentalists, who say it could pollute underground water.

The Government's decision to oppose it comes as it fights to win the Alice Springs seat of Araluen at a by-election on October 9.

In a statement, Labor's candidate for the seat, Adam Findlay, says a mine so close to the town has the potential to adversely affect the tourism market and the economy.

Chief Minister Paul Henderson says there is strong community opposition to the mine and Labor is listening to the concerns.

But he says it does not mean the Government is opposed to new uranium mines elsewhere in the Territory.

Mr Henderson says any approval of a uranium mine is the responsibility of the Commonwealth Government.

Greens Federal senator Scott Ludlam says he is still concerned about what the Federal Government will do.

"Obviously now all eyes are on the CLP to make sure that they match this commitment," he said.

"It would be very strange if they didn't, but we need to keep in mind federal Labor can override the Northern Territory as we see happening over and over again."

The Chamber of Commerce's Chris Young says it is a disappointing development based on emotions, rather than scientific fact.

"If the mine doesn't go ahead Alice Springs is going to miss out, end of story, because they are not going to benefit from any sort of development in that respect," Mr Young said.