Indian Prime Minister Manmohan Singh hopes to complete his full five-year term and avoid early elections, suggesting on Friday this was a higher priority than forcing through a controversial nuclear deal with the United States.

"Elections are still far away. This government still has one-and-a-half years to complete its time," he told a seminar in the Indian capital. "It is my hope and expectation we will stay the course."

"Of course I am optimistic," he added in response to a question. "We have a lot of unfinished agenda."

The government's communist allies have threatened to withdraw crucial parliamentary support if the deal goes ahead, prompting talk of a snap poll ahead of its scheduled date in 2009.

Singh said the nuclear agreement, which would give India access to international civil nuclear cooperation after more than three decades, was "an honourable deal" that would be good for the country and the world.

But he acknowledged the government was trying to reconcile differing views within its coalition, as signs emerge it is keen to avoid an early poll -- even if that puts the deal at risk.

"We are not a one-issue government," he said. "We have made changes in several areas. It is certainly true if the deal doesn't come through, it will be a disappointment, but it will not be the end of life."

Just as the row seemed to reach a crescendo, the government and the communists pulled back from the brink at crucial talks this week, downplaying talk of a crisis and agreeing to meet again to resolve their differences over the deal on Oct. 22.

Coalition and Congress party chief Sonia Gandhi, seen as India's most powerful politician, echoed Singh's comments shortly afterwards, saying the government wanted to fulfil its promises to the electorate and did not want an early election.

Political analysts said the government's smaller coalition allies -- facing possible losses in a snap vote -- were also uneasy at the prospect of risking their political future on an agreement surveys show is a low priority for most Indians.

"It is likely that the government for the first time is feeling the real threat to its majority," said political analyst Mahesh Rangarajan. "It doesn't mean the deal is off," he added, "(but) they will go slow."    

Underscoring warmer ties with Washington, the deal would allow India to import US nuclear fuel and reactors, despite having tested nuclear weapons and not signing the Non-Proliferation Treaty.

But the communists have warned the government against holding formal talks with the International Atomic Energy Authority (IAEA) about placing civilian nuclear reactors under UN safeguards, a first step in making the deal operational.

In the audience as Singh spoke on Friday was IAEA chief Mohamed ElBaradei, who has spent this week on a long-scheduled trip to India, during which he met the prime minister without holding formal talks on the agreement.

On Wednesday ElBaradei made a strong pitch for the deal, saying harnessing nuclear energy was essential for India to maintain strong rates of economic growth.

The government had been hoping to conclude an agreement with the IAEA by end-October, so it could seek the approval of the 45-member Nuclear Suppliers Group and then get a final approval from the US Congress before the end of President George W Bush's administration.

But that schedule now looks threatened by the political impasse in India.

Indian stocks had been buoyant this week as the chance of a snap poll seemed to recede, but the key stock index was down by nearly 1 percent in early afternoon trade on Friday.

The nuclear deal has been criticised by many outside India, including some members of the US Congress who say it undercuts a U.S.-led campaign to curtail the nuclear ambitions of nations such as Iran. - Reuters   <