NEW DELHI (BBC) --Manmohan Singh have spoken by telephone to discuss plans to ratify a landmark nuclear fuel treaty.

It comes ahead of a visit to Delhi later this month by senior U.S. state department official Nicholas Burns.

White House spokesman Tony Snow said the leaders welcomed recent progress in talks to settle the overall agreement.

The nuclear fuel deal was struck in July 2005 but details still need to be finalized.

"The two leaders expressed happiness at the strengthening of bilateral relations and reviewed developments pertaining to negotiations on bilateral civil nuclear cooperation," Singh's media adviser Sanjaya Baru said in a statement in Delhi.

Last week, Indian and U.S. officials held two days of talks in Washington and the U.S. state department said the two sides made "extensive progress".

The talks have been slowed by differences over India's right to test weapons and reprocess spent fuel. ----------------------- Differences

Under the deal, energy-hungry India would import U.S. civilian nuclear fuel, even though it has not signed the Non-Proliferation Treaty (NPT).

The U.S. sees India as a powerful democratic ally in the region Critics of the deal say it could boost India's nuclear arsenal.

India and the US were once on opposite sides of the Cold War fence, but are now close allies.

The accord was agreed during Bush's visit to India last March and the U.S. Congress agreed in December to let talks move forward.

But India's government has faced criticism at home that the deal will compromise its nuclear independence.

One crucial sticking point is over a clause saying the U.S. would withdraw fuel and equipment if India breached its unilateral moratorium on nuclear tests.

India's military says a future nuclear test by Pakistan or China could compel it to follow suit.

Another key area of difference is over reprocessing. India wants complete freedom to process all of its spent fuel, while the U.S. argues that material it provides must not be used for military purposes.

Under the agreement, India will get access to U.S. civil nuclear technology and fuel, in return for opening its civilian nuclear facilities to inspection.

But its nuclear weapons sites will remain off-limits.