SYDNEY, September 15, 2008 (AFP) - Resource-rich Western Australia will be opened up to uranium mining by its new conservative-led government, the incoming state premier said Monday.

Premier-elect Colin Barnett said he would scrap a de facto ban on mining the nuclear fuel to raise funds for development projects as part of a deal which enabled him to form a government.

Barnett's conservative Liberal Party became the first non-Labor government to win power in any state in a decade after securing support from the rural-based National Party.

The victory shattered an absolute grip on power across Australia by Labor, which is led nationally by Prime Minister Kevin Rudd and controlled all eight state and territory governments.

Australia has the world's largest known reserves of uranium and plans for its exploitation played a key role in the election after the Labor government pledged to enshrine the mining ban in law.

The state is already riding a boom driven by demand for its iron ore, natural gas and other resources by rapidly growing Asian nations and Barnett said mining yellowcake would add another huge revenue stream.

'We will allow uranium mining in Western Australia,' he told the Australian Broadcasting Corporation.

Only three uranium mines operate in the country, although several more have been proposed, including in Western Australia.

The National's state leader Brendon Grylls, who held the balance of power after the September 6 elections left both Labor and Liberal parties without a majority, had said he was open to negotiations with both parties.

But he said he would not support either unless they backed his plan to spend some 25 percent of the state's mineral royalties -- about 700 million dollars (568 million US) -- on infrastructure and services in rural areas.

Barnett confirmed that he had agreed to the 25 percent demand and rejected criticisms that the commitment was excessive.

'Western Australia is still in a very strong economic position,' he said.

'The growth of China, the emergence of India, even parts of the (former) Soviet Union... the demand for our minerals is enormous. What I intend to do is to make more of the economic boom before it runs out of steam.'