The Senate Foreign Relations Committee approved legislation, on Thursday, to enable the accord in a 16-2 vote, two days after the House of Representatives' International Relations Committee gave its backing 37-5.
Under the deal, the United States will aid the development of civil nuclear power in India in return for New Delhi placing some of its nuclear facilities under International Atomic Energy Agency inspections.
The full Senate and House of Representatives could now hold votes on the legislation next month, though no schedule has been drawn up and the deal still faces opposition.
India's nuclear tests
The US Atomic Energy Act of 1954 currently prevents the United States from trading nuclear technology with nations that have not signed up to the Non-Proliferation Treaty. The law has to be amended for the India deal to be effective.
India had tested nuclear weapons
in 1974 and 1998
India tested nuclear weapons in 1974 and 1998 and, as a result, is currently banned by the United States and other major powers from buying fuel for atomic reactors and other related equipment.
But Richard Lugar, Senate Foreign Relations Committee chairman and an influential Republican, hailed the measure before the vote saying it was "the most important strategic diplomatic initiative undertaken" by the Bush administration.
"By concluding this pact and the far-reaching set of cooperative agreements that accompany it, the president has embraced a long-term outlook that seeks to enhance the core strength of our foreign policy in a way that will give us new diplomatic options and improve global stability," he said.
Others greeted the deal as a sign of a geopolitical re-alliance following the Cold War, which had seen India stand close to Moscow while Washington supported its rival Pakistan.
"For the US and India today, however, our national interests are in concert perhaps more so than at any time in the past"
Joseph Biden, Democratic Senator
"For the US and India today, however, our national interests are in concert perhaps more so than at any time in the past," said Democratic Senator Joseph Biden before the vote.
He said the agreement would allow India to "jump-start its quest for alternate energy source-wells" as its economy booms.
Proponents gave equally strong support as the measure - forged last year by Bush and Manmohan Singh, the Indian prime minister – was passed by the House committee on Tuesday.
"This is a defining moment in our relationship with the great nation of India," said Representative Tom Lantos, the panel's top Democrat and a primary sponsor of the bill.
A senior Indian official in New Delhi welcomed the House panel's vote, telling reporters a “major hurdle” had been cleared in the implementation of the deal.
But he cautioned "we are not quite there yet," referring to the full vote still needed.
Some US lawmakers have, however, expressed doubts about extending civil nuclear technology to India.
"We intend to make the case that the purported benefits of this deal are an illusion, and the risks to the international nuclear non-proliferation regime are quite real"
They say the deal would not only make it harder to enforce rules against nuclear renegades Iran and North Korea but also set a dangerous precedent for other countries with nuclear ambitions.
"We intend to make the case that the purported benefits of this deal are an illusion, and the risks to the international nuclear non-proliferation regime are quite real," said Democratic Representative Ed Markey, one of the chief opponents.
Last week, a group of non-proliferation experts from across the political spectrum wrote to Congress, arguing that the nuclear deal would put the United States in violation of the NPT by assisting a non-nuclear-weapon state in its pursuit of nuclear weapons.