Making a fresh proposal, India has offered to set up a dedicated safeguarded facility for reprocessing of atomic fuel in an effort to break the logjam over a proposed agreement to operationalise the civilian nuclear deal with the United States.

As Prime Minister Manmohan Singh [Images] met US President George W Bush on Friday, officials of the two countries discussed in detail the proposal under which India will negotiate a higher level of safeguards with the International Atomic Energy Agency.

National Security Adviser M K Narayanan and his US counterpart Stephen Hadley held thorough deliberations on the proposal for establishing a dedicated national facility for reprocessing of spent nuclear fuel, sources said.

The proposal was made to find a way out of the problems in talks over 123 agreement due to differing positions over the reprocessing issue.

As officials discussed the proposal, Dr Singh had a brief meeting with Bush in Germany's [Images] sea-side resort of Heiligendamm on the sidelines of the G-8 Summit. Though details of the 'pull-aside' meeting were not known, the two leaders were expected to touch upon the civilian nuclear deal issue.

Negotiators of the two sides, who have failed to end the impasse, are looking for a political push at the highest level and the meeting between Dr Singh and Bush was expected to give a signal in this regard.

"The conversation was positive," Prime Minister's media adviser Sanjaya Baru said after the meeting between Dr Singh and Bush.

Key negotiators of the two countries -- Foreign Secretary Shiv Shankar Menon and US Under Secretary of State for Political Affairs Nicholas Burns -- met in New Delhi last week but failed to conclude negotiations as differences persisted.

The two countries are aiming at sorting out differences particularly on issues like reprocessing right, perpetuity of fuel supplies and continuance of the civil nuclear cooperation if India were to conduct an atomic test.

India has been insisting on having the right to reprocess spent nuclear fuel and is not ready to accept any legally binding clause in the agreement that could cap its strategic nuclear programme.      

Under the US law, Washington will have the right to seek return of material and equipment in the event of India carrying out nuclear tests.

The US contention that Presidential waiver could be a way out of the binding under the American law does not find much favour on the Indian side which argues that future Presidents could overturn the waiver.