After several days of talks, congressional negotiators signed off on the bill, which reconciles separate versions previously endorsed overwhelmingly by the House of Representatives and the Senate.
Both chambers of Congress must now vote again on the measure before sending it to President Bush to sign into U.S. law. The House was expected to consider the bill Friday. Details of the final bill were not immediately available.
The bill's passage would hand a rare victory to Bush, who has seen his popularity tumble and who will have to deal in January with a Democrat-controlled Congress after his Republican Party was defeated in elections last month.
The bill carves out an exemption in American law to allow U.S. civilian nuclear trade with India in exchange for Indian safeguards and inspections at 14 civilian nuclear plants; eight military plants would be off-limits. Congressional action was needed because U.S. law bars nuclear trade with countries, such as India, that have not submitted to full international inspections.
Although Bush's signature will change U.S. law, several hurdles loom before India and the United States could begin civil nuclear trade, including another congressional vote once technical negotiations on an overall cooperation agreement are settled between India and the United States.
The two countries must also obtain an exception for India from the rules of the Nuclear Suppliers Group, an assembly of nations that export nuclear material. Indian officials also must negotiate a safeguard agreement with the U.N. nuclear watchdog.
Senior lawmakers from both political parties have championed the proposal, which supporters promote as a major shift in U.S. policy toward a strategically important Asian power that has long maintained what the United States considers a responsible nuclear program.
"We now have the opportunity to achieve a geo-strategic realignment of India with the United States," Democratic Rep. Tom Lantos said. "This will be of immense importance to global security and economic development, while at the same time furthering our interests in limiting the spread of nuclear weapons."
Critics say the extra nuclear fuel that the deal would provide could free India's domestic uranium for use in its weapons program. India developed its nuclear weapons outside the Nuclear Non-Proliferation Treaty, which it has refused to sign.