Julia Gillard, the Australian prime minister, says she favours overturning a ban on sales of uranium to India as a means of strengthening relations with one of the world's fastest growing economies.
Gillard said on Tuesday the ruling Labour party would debate lifting the ban at its conference next month.
"I believe the time has come for the Labour party to change this position. Selling uranium to India will be good for the Australian economy and good for jobs," Gillard told reporters on Tuesday.
"This will be one way we can take another step forward in our relationship with India. We have a good relationship with India; it is the world largest democracy, a stable democracy."
Canberra currently refuses to sell nuclear material to India because it has not signed the Nuclear Non-Proliferation Treaty (NPT), which aims to control the spread of nuclear weapons while promoting the development of peaceful nuclear power.
India conducted nuclear weapons tests in 1998 and is one of three nuclear-armed nations, along with Israel and Pakistan, that are non-signatories of the NPT.
Gillard's call is likely to spark a lively debate in Australia, but she can count on the support of Labour's dominant right faction in overturning the ban, as well as from the conservative opposition, which also supports uranium sales to India.
The policy would not need to go to parliament for approval.
Al Jazeera’s Andrew Thomas, reporting from Sydney, said: "Gillard wouldn’t get any trouble with getting any legislation through. She will have more issues with her own backbenches. Some on the left in her party do not want uranium to be sold to India.
"Likewise, the Green Party that props up Gillard’s minority government is against this as well."
'Class of its own'
Gillard said the policy shift would apply only to India and not open up potential sales to Israel or Pakistan, as only India had sought and received an exemption from the International Atomic Energy Agency and the Nuclear Suppliers Group.
"So that puts India in a class of its own," Gillard said. "When you look at other nations, whether it be Pakistan or Israel, they are not in that same class."
Gillard's policy shift comes on the eve of US President Barack Obama's visit to Australia and would bring Australia’s uranium policy into line with the US.
Washington in 2008 signed a landmark civil nuclear agreement with India over the use of uranium for nuclear energy.
Australia, one of the United States' closest allies in the region, supported the US-India nuclear agreement as a member of the 46-member Nuclear Supplier's Group, but had continued to refuse to sell uranium to India.
India has long complained about the ban as it seeks access to nuclear supplies for its power sector and growing economy.
Australia has almost 40 per cent of the world's known uranium reserves, but supplies only 19 per cent of the world market. It has no nuclear power stations.