Israeli officials say the United States has dropped its opposition to Israel selling advanced spy planes to India.
The officials say Washington has lifted its objections to Israel selling the airborne military radar system, known as Phalcon, to India. They say the U.S. administration has given the go-ahead for the $1 billon deal, involving up to four planes, apparently without conditions.
News of the breakthrough was first reported by the respected diplomatic correspondent for Israel's Ha'aretz newspaper, Aluf Benn.
Israel and India first began negotiations on the contract 18 months ago and were understood to have had initial approval from Washington.
But early last year Israel postponed the sale, on the advice of the U.S. Government. The decision was made amid fears that the deal could increase tensions between India and Pakistan, which appeared to be on the brink of war.
A spokeswoman for the Israeli Defense Ministry says negotiations between Israel and India on a contract still have to be finalized.
Indian officials in Israel to declined to comment. U.S. officials said they were checking the report.
The Phalcon consists of sophisticated Israeli-made radar mounted on a Russian-built cargo plane. The radar will enable India to have long-range identification of targets and weapons inside Pakistan.
In 2000, Israel scrapped the sale of four Phalcon aircraft to China, following concerns in Washington that the planes would be used against Taiwan.
Meanwhile, the United States is reportedly considering allowing Israel to export the Arrow anti-missile system to other countries. The system was developed jointly by Israel and the United States, and such sales therefore require Washington's approval.
Israel is believed to also want to sell the Arrow defense system to India.