Australia is preparing to overturn its strict nuclear non-proliferation policy on uranium sales to allow exports of yellowcake to India.

The move, which will be fiercely contested by the Labor left, Greens and anti-nuclear activists, is being driven by Prime Minister Julia Gillard on economic, humanitarian and climate change arguments.

Lifting the ban on uranium sales to India would also significantly help Canberra's bid to improve relations with New Delhi, a diplomatic ambition marred by present nuclear policies and a damaging spate of attacks on Indian students.

Australia regards India as a rising regional military and economic superpower and since winning office Labor has been pursuing closer relations in areas including strategic and security cooperation.

Expanded uranium sales would be supported by the Coalition - which dumped Labor's previous three-mine policy after former Prime Minister John Howard won office in 1996 - and seem likely to survive determined opposition at next month's federal Labor Party conference.

The conference will also face another fiery debate over same-sex marriage and Gillard's intention to seek its approval for a conscience vote in Parliament. Gillard is firmly opposed to gay marriage. Advocates seeking a reversal of Labor's present opposition say she is pushing the conscience vote in the knowledge that it would almost certainly fail.

Gillard's decision to push for yellowcake sales to India contradicts Australia's existing policy, which emphasises the "strategic significance" distinguishing uranium from other energy commodities, and insists on special arrangements to prevent its use in nuclear weapons.

Uranium may be exported only for peaceful non-explosive purposes under bilateral safeguards agreements, and the requirement that customers must "at a minimum" be a party to the Nuclear Non-Proliferation Treaty.

India, a nuclear power with an arsenal of ballistic missiles and nuclear-capable aircraft and warships, consistently refuses to sign the treaty.

The treaty would require India to dispose of its atomic weapons, a key deterrent against the neighbouring nuclear states of China and Pakistan.

Gillard argued yesterday that the rules had effectively been changed by the United States-India Civil Nuclear Agreement, under which India agreed to a clear division between civil and military facilities, and to subject its civilian plants to International Atomic Energy Agency safeguards.

The deal was sanctioned by the international non-proliferation body the Nuclear Suppliers Group - set up after India's first atomic test in 1974 - which agreed to an India-specific exemption to treaty requirements.

"This effectively lifted the de facto international ban on co-operation with India in this area," Gillard told reporters. "As India rises and brings hundreds of millions of people out of poverty it will need more energy."

Labor has already removed a significant party of its uranium stance, dropping its no-new-mines policy in 2008 and opening the gate for massive expansion at Australia's three existing mines and a flood of new projects.

Australia sells uranium to the US, Japan - including the stricken Fukushima plant - France, Britain, Finland, Sweden, South Korea, China, Belgium, Spain, Canada and Taiwan.

Mining is allowed in Western Australia, South Australia and the Northern Territory. It is banned in New South Wales and Victoria. Queensland allows exploration, but Labor Premier Anna Bligh said the state would not lift its ban on mining regardless of federal policies, and Opposition Leader Campbell Newman said the Liberal-National Party had no plans to approve the development of uranium mines.

Backed by Foreign Affairs Minister Kevin Rudd and Resources Minister Martin Ferguson, Gillard said: "Our best possible partnership with India is also good for Australian jobs."

Australia's fourth-biggest market with exports worth almost A$16 billion ($21 billion), India is expected to lift nuclear power's share of electricity generation from 3 per cent to 40 per cent by 2050.

Gillard said any uranium sales to India would be subject to strict adherence to IAEA arrangements and strong bilateral and transparency measures to ensure it would be used only for peaceful purposes.

The move is supported by the powerful Australian Workers Union, but opposed by the Labor left and the Greens.

Greens leader Bob Brown said: "There's no doubt uranium, through this process, will end up in the stockpile of nuclear weapons in India."

AUSTRALIA'S URANIUM
* Australia has 31 per cent of the world's recoverable uranium.
* It produces 11 per cent of the global uranium requirement.
* Is the number 3 producer, behind Canada and Kazakhstan.
* Exports are about 7000-10,000 tonnes a year. They are worth about A$1 billion.
* Exports forecast to increase to 14,000 tonnes in 2014.
* At full potential, Australia could lift to 28,500 to 37,000 tonnes by 2030.
* This could add up to A$17.4 billion of GDP between now and 2030.

The world and uranium
* 432 nuclear reactors in 31 countries.
* They provide 13.5 per cent of the world's electricity requirements.
* Operating reactors are forecast to rise to 782 by 2030.
* About 60 countries are interested in developing nuclear energy capacity, with most growth in India and China.

- AAP

By Greg Ansley Email Greg