Although the US Congress agreed in December to let talks on the energy deal move forward, Indian and US officials are still at odds over the fine print of an accord seen as the centrepiece of a new post-Cold War relationship.

There was some cause for optimism after talks in Washington earlier this week, with Indian diplomats saying problem issues like the treatment of spent fuel and India's right to test nuclear weapons could be overcome.

But in the aftermath of the talks on how India should get previously forbidden nuclear technology, seven US senators wrote to Prime Minister Manmohan Singh telling him not to cosy up too much with Iran.

Washington is trying to isolate Tehran over its disputed nuclear programme and alleged support for terrorism.

"We are deeply concerned by India's increasing co-operation with that country," said the letter, which was widely published in the Indian media.

The senators -- who still have a say over whether the nuclear accord can go through -- objected to "the exchange of visits between high-level officials, enhanced military ties, and negotiations of agreements to establish closer economic relations."

The text also singled out India's hopes to buy Iranian gas via a multi-billion dollar pipeline -- a project which, like the nuclear energy deal with the US, is seen as crucial for energy-hungry India to fuel long-term economic growth.

These problems, the senators said, "have a significant potential to negatively affect the relationship between the US and India."

Indian officials, however, are putting on a brave face over the letter -- the second in as many months.

"It is a pressure point no doubt, but I would not regard it as a deal breaker," a senior government official told AFP on condition of anonymity.

But an Indian foreign ministry official said the US pressure over how his country chooses to conduct its traditional non-aligned foreign policy could leave the government exposed to more domestic criticism over the deal.

"In that sense, it could have a bearing on the US-India nuclear talks," the official said.

Influential opposition Hindu nationalists and even communist allies of the government already argue the deal will compromise India's nuclear weapon's programme by forcing a separation and inspection of civilian atomic facilities from military sites.

In a stormy parliament session on Friday, several lawmakers were furious over a letter they saw as an "open threat" and interference in India's "internal affairs."

The government has not directly commented on the letter, but has pointed to previous statements by Singh opposing the emergence of another nuclear power in the region and calling for Iran to cooperate with UN demands to limit its suspect activities.

Security analyst C. Uday Bhaskar said the snag leaves India having to "follow a nuanced policy" -- prioritising its desperate need for modern atomic energy technology while being careful not to fall out with key oil and gas supplier Iran.

"At this moment the nuclear deal is important and it is important to get on with it," he said.

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