An official commission on Tuesday recommended lifting restrictions on nuclear energy and uranium mining, setting up a showdown between a government eager to harness Australia's ample uranium supplies and members of the opposition Labor Party, who remain deeply suspicious of the nuclear industry.

Australia, which holds 40 percent of the world's uranium reserves, has no commercial nuclear power plants and strictly limits uranium mining.

The recommendations, issued by a panel commissioned in June by Prime Minister John Howard's conservative government, asserted that easing curbs on the mining and enrichment of uranium could reduce Australia's use of coal and lift revenues from uranium exports by $1.4 billion a year

The commission suggested that Australia might need as many as 25 nuclear reactors to supply a third of Australia's electricity by 2050, and to reduce greenhouse gas emissions.

The recommendations drew immediate criticism from environmentalists and members of the Labor Party, which banned nuclear power plants and the opening of new uranium mines when it ran the government in the 1980s.

"If John Howard is re-elected, we will go down an inexorable course for 25 nuclear reactors in this country and tens of thousands of tons of nuclear waste," Kim Beazley, the Labor Party leader, said after the panel issued its recommendations. Elections are scheduled for next year.

The chief executive of Greenpeace Australia, Steve Shallhorn, said: "In an age of terrorism and fears about nuclear proliferation, and with so many other forms of safe renewable energy available, expanding the nuclear industry in Australia is a dangerous mistake."

But traditional concerns over nuclear waste and proliferation may be giving way to growing alarm over climate change. More than half of Australia is sweltering through a fourth year of drought that many analysts have attributed to global warming.

Howard, who until recently had expressed skepticism that climate change was taking place, now says he accepts the scientific consensus that global carbon emissions are warming the planet.

The prime minister has long advocated a more liberal nuclear policy, and nuclear energy offers a means of cutting greenhouse gas emissions, its proponents argue.

The panel's report supports that contention, asserting that Australian demand for electricity was expected to double in 45 years. Meeting that demand while significantly reducing carbon emissions would prove prohibitively expensive without nuclear power, the report says.

"Without nuclear energy, in our opinion, the cost of achieving the required emissions-reduction targets would be much higher," said the report's author, Ziggy Switkowski, a nuclear physicist who was once head of the state-owned telecommunications company Telstra. He was speaking at the National Press Club here.

"We would need to deploy more costly and less certain technologies for any given level of emission reduction," Switkowski added.

Although the Labor Party and most of Australia's environmental organizations are vigorously opposed to nuclear power, a 2005 survey found a small public plurality in favor of commercial plants.

Beazley, the Labor Party leader, said recently that it was time to rethink the policy under which only three uranium mines are allowed to operate nationwide. But the party's shadow minister for the environment, Anthony Albanese, said he would reject any dilution of its stance on the nuclear industry.

For now, Australia relies on its immense coal reserves for most of its electricity, making it by some estimates the world's worst emitter of greenhouse gases on a per capita basis. The commission's report said that at current prices, nuclear energy would be 20 to 50 percent more expensive than power from coal-fired plants. But as greenhouse gas emissions are monetized in coming years through taxes and carbon-trading schemes, nuclear power will be become cost competitive.

"The earliest that nuclear electricity could be delivered to the grid would be 10 years, with 15 years more probable," Switkowski said. "This gap may close in the decades ahead, but nuclear power, and renewable energy sources, will only become competitive in Australia in a system where the costs of greenhouse gas emissions are explicitly recognized."

So far, however, Howard has resisted efforts to implement a carbon-trading market or to apply punitive taxes to coal emissions, although he now expresses interest in controlling carbon emissions in ways that do not harm the economy.

The coal industry is dominated by the same powerful companies that control uranium mining - BHP Billiton and Rio Tinto.

Many observers said they thought the report was being used by Howard to gauge public attitudes toward nuclear power and the nuclear materials trade.

The first step in the development of any nuclear industry would be to lift the "three mines" policy imposed by the previous Labor government: Although there are only three licensed mines operating, a fourth has been given permission to open.

But licensing new mines remains under the purview of state and territorial governments, all of which are controlled by the Labor Party.

The battle to get approval for the fourth mine, which is to be opened in the Northern Territory, was bruising and succeeded only after Canberra invoked federal powers that it cannot wield in most of the rest of the country.

Howard has already expressed support for the next step - developing enrichment capacity to serve the booming market for uranium, driven principally by surging demand from China.

Australia has signed an agreement with China to supply unenriched uranium ore, known as yellowcake, and demand for the uranium is expected to grow as the economies of China and India continue to expand.

But any decision by the government to join the club of nuclear refiners is unlikely to please Washington, which is committed to trying to suppress nuclear proliferation by limiting the number of countries that enrich fuel to those that already have the capability.

In the report, Switkowski says that Australia's contribution to the global supply of enriched uranium was unlikely to increase proliferation risks.

Australia is riding high on the back of strong global prices for commodities. It is one the world's largest exporters of coal, but the government has apparently concluded that environmental consequences of carbon fuels will only grow and it is eager to position the country for what could be the next wave of energy production.