The federal government is expected to do a policy backflip allowing India to buy Australian uranium although it isn't signed up to the nuclear non-proliferation treaty (NPT).
Traditionally, being a signatory to the NPT has been a condition of all uranium sales.
Foreign Minister Alexander Downer would not confirm reports that the National Security Committee of Cabinet had signed off on a proposal to begin talks on a nuclear safeguards agreement with India, paving the way for uranium sales.
Opponents claim a deal would weaken global efforts to prevent the proliferation of nuclear weapons by rendering the NPT meaningless.
India may get an exemption due to an agreement it struck with the United States, opening its civilian reactors to international inspections.
However, that deal was looking shaky today after India interpreted the agreement as meaning that it could still conduct future nuclear tests.
An Australian agreement is likely to follow a similar form, with international inspections of Indian power stations a pre-requisite condition.
Mr Downer disputed a change in policy would be radical, and accused Labor of hypocrisy because it had sold uranium outside the NPT when it was in government.
"It does constitute a shift in policy if we announce this change - but not as radical a shift as the Labor party pretends because the Hawke government exported uranium to France when France wasn't a signatory to the (NPT)," he told ABC Radio.
Labor insists any change would send the wrong message to the world.
"What I'm concerned about is incrementally, step by step, stripping away the integrity of the nuclear non-proliferation treaty," Opposition Leader Kevin Rudd told reporters.
"Australia has always been a force for good on the NPT worldwide.
"But now we have a government of Australia pulling the rug from under the NPT and saying, we don't need to observe it anymore."
Australian Greens senator Christine Milne described any change as a seismic shift in policy which would have major ramifications for global security.
"If the deal follows the US lead, it will mean dropping Australia's commitment to both the nuclear non-proliferation treaty and the comprehensive test ban treaty," she said.
"It will free up India's other supplies of uranium to be channelled into its nuclear weapons program, which the deal will not restrict in any way.
"(And) it will accelerate the arms race between India and Pakistan, a country on the verge of a fundamentalist revolution."
Michael Angwin, executive director of the Australian Uranium Association, anticipates the government will continue to take a strong stand against nuclear proliferation.
"Australia has played a significant role in making the world's non-proliferation regime the success it is today," he said.
"One of the hallmarks of uranium exporting countries, particularly Australia, has been a commitment to robust anti-proliferation activities."
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