The legislation reconciled separate bills passed by the Senate and the House of Representatives aimed at implementing a nuclear agreement reached between Indian Prime Minister Manmohan Singh and US President George W Bush last year.

It is expected to be passed by the House and Senate on Friday before Bush signs it into law.

Lawmakers said key provisions objected by the administrations of Bush and Singh were "watered down," including one that initially virtually compelled India to back US efforts to contain New Delhi's traditional ally Iran's nuclear programme.

"This latest step in a long and sometimes arduous legislative process has resulted in a satisfying consensus," said Tom Lantos, the incoming head of the powerful House international affairs panel.

The final legislation "strikes the right balance between giving the President the necessary flexibility to negotiate the best agreement possible with New Delhi, while at the same time preserving Congressional oversight," he said.

Under the deal, India, a non-signatory of the nuclear Non-Proliferation Treaty (NPT), will be given access to civilian nuclear technology in return for placing its atomic reactors under global safeguards.

The pact was seen as controversial because the US Congress had to create a rare exception for India from some of the requirements of the US Atomic Energy Act, which currently prohibits nuclear sales to non-NPT signatories.

In addition, US weapons experts warned forging such an agreement with non-NPT member India could make it harder to enforce rules against nuclear renegade North Korea and set a dangerous precedent for other nations with nuclear ambitions.

Singh and US Secretary of State Condoleezza Rice personally lobbied US lawmakers to remove "problematic" provisions seen as going against the spirit of the nuclear agreement signed by Bush and the Indian prime minister in July last year.

India on Friday welcomed American lawmakers' endorsement of a plan that allows the United States to ship civilian nuclear fuel and technology to India, news reports said.

Both chambers must now vote again on the bill before sending it to President Bush to sign into law. The House was expected to consider the bill Friday, and the Senate after that.

While India had pushed hard for the deal, which it urgently needs to help meet its rapidly growing energy needs, there were concerns here that the final version would stray from the original intent and limit the military's nuclear programme.

There were also concerns about language in the Senate version that would have required Bush to determine that India was cooperating with US-led efforts to confront Iran about its nuclear ambitions.

That language was watered down in the final bill. As written now, the bill would require the president to provide Congress with an annual report detailing India's efforts on Iran.

India's NDTV reported Friday that New Delhi was pleased with the softer stance on Iran and quoted an unnamed official as saying "essentially the bill gives India the substance of what it wants."

C Uday Bhaskar, a defence analyst with the Institute of Defence Studies and Analyses, said both sides should be pleased with the bill because "it allows India to retain its strategic capabilities while being sensitive to US concerns on nuclear nonproliferation."

The deal reverses decades of US anti-proliferation policy by allowing civilian nuclear trade with India in exchange for Indian safeguards and inspections at its 14 civilian nuclear plants. Eight Indian military plants would be off-limits to inspectors.

Critics say the cooperation plan could boost India's nuclear arsenal and set off a nuclear arms race with rival Pakistan. India developed its nuclear weapons outside the international Nuclear Nonproliferation Treaty, which it has refused to sign.