India cleared one of the last three hurdles to its historic nuclear deal with the United States today when the International Atomic Energy Agency (IAEA) approved a mechanism to safeguard and inspect Indian nuclear facilities.

The nuclear deal, agreed in 2005, lifts a 34-year ban on selling US nuclear fuel and technology to India even though Delhi has tested nuclear weapons and refuses to sign the Nuclear Non-Proliferation Treaty (NPT).

India’s government survived a no confidence vote last week over the deal, which it says will help to ease its energy crisis, but opponents say will give Washington too much control over Indian foreign and nuclear policy.

However, India still had to get the approval of the IAEA and the 45-nation Nuclear Suppliers’ Group (NSG) before the White House could try to push the deal through the US Congress in the final weeks before President Bush steps down.

Activating the deal would be a badly needed foreign policy victory for Mr Bush, cementing a new strategic relationship with the world’s largest democracy after decades of ideological tension during the Cold War.

The IAEA’s board of governors met today to discuss India's draft safeguards agreement, which would separate its military and civilian nuclear facilities and allow UN monitors access to 14 of its 22 nuclear reactors by 2014.

The 35-nation board approved the agreement unanimously, despite criticism of its ambiguous wording from Pakistan and international arms control experts.

"It satisfies India's needs while maintaining all the agency's legal requirements," Mohammed el Baradei, the IAEA's head, said.

Pakistan, which has fought three wars with India since 1947, wrote a letter to IAEA and NSG members last week complaining that the agreement "threatens to increase the chances of a nuclear arms race in the subcontinent".

India and Pakistan both tested nuclear weapons in 1998, but are not recognised as official "nuclear powers" and are not allowed to trade nuclear materials with most countries because they have not signed the NPT.

Islamabad says the India-US deal endorses India as a nuclear power, while leaving Pakistan out in the cold.

However, Pakistan has come under huge pressure from Washington, which announced last week that it would help to upgrade the Muslim nation’s ageing fleet of F-16 fighters – key assets in the event of another war with India.

Gregory L Schulte, the chief US envoy to the IAEA, dismissed the concerns of many arms control experts ahead of today's meeting, saying the safeguards agreement would be a "net gain" for global non-proliferation.

"The agreement is a sound one based on the IAEA's approved safeguards system," he said.

Now that the IAEA board has approved India's draft agreement, Delhi will approach the NSG, which is due to meet on August 21 and 22.

The United States is also lobbying hard for the informal grouping of nuclear exporters to waive its usual principle of not trading with nations that have not signed the NPT.

However, arms control experts have urged the NSG to clarify all the ambiguities in the deal -- such as which facilities will be inspected and what happens if India conducts another nuclear weapons test.

They fear that by making an exception for India, the international community could set a precedent for other aspiring nuclear powers, including North Korea and Iran.

"The question is not will it be approved or will it not be approved; the question is what will the deal look like at the end of the day," said Daryl Kimball, Executive Director of the Arms Control Association.

"My expectation is that the NSG will eventually agree to the some exemption to India from its rules, but will not be a clear exemption."

US opponents of the deal worry that in its current form it violates the Hyde Act, which requires the President to inform Congress precisely which Indian nuclear facilities have been placed under IAEA supervision in perpetuity.

Ambassador Robert Gray, former US Representative at the Conference on Disarmament, described the nuclear deal as an "unmitigated disaster".

"The United States has given India a blank cheque," he said. "Now we are assisting them to cash the cheque in another Bank, the NSG."

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