The deal, which would provide India access to U.S. nuclear technology and material, was first struck in 2005. There are two main sticking points: India has contested certain provisions that would hamper what it calls a sovereign right to develop its nuclear weapons program, and the U.S. Congress wants New Delhi to break development ties with Iran.

White House spokesman Tony Snow said President Bush and Prime Minister Manmohan Singh "welcomed the recent progress in the civil nuclear cooperation initiative. They also agreed on the need for negotiations to conclude the bilateral agreement on peaceful nuclear cooperation."

U.S. and Indian leaders last week attempted to save the deal, The Dawn reports. Foreign Secretary Shiv Shankar Menon was in Washington last week, and U.S. Undersecretary of State Nicholas Burns will head to India later this month.

The United States is pressing India to halt activity in the Iran-Pakistan-India natural-gas pipeline. India wants the U.S. Congress, which needs to give final approval of the nuclear deal, to remove restrictions on weapons testing and enriching bomb-grade uranium.

India, which has nuclear weapons and hasn't signed key international weapons treaties, would be given a break from U.S. law that bans any nuclear trade with such countries.

India intends to increase its nuclear-energy sector as its demand for power grows with its economy.

The Hindu reports both leaders were happy with the results of the phone conversation.

Nuclear power currently makes up 3 percent of India's power mix. It is expected to remain at those levels in the future, too, primarily because of India's expected increased in demand for energy.