* Environment minister says approval delayed
* Says decision will be made by later this year
* Could be blow to GVK's plans to meet demand for coal in India (Adds GVK response)
CANBERRA, June 5 (Reuters) - Australia said on Tuesday it would delay environmental approval for a A$10 billion ($9.72 billion) coal project proposed by India's GVK Power & Infrastructure, a potential setback in the company's bid to tap voracious appetite for coal in its home market.
Environment Minister Tony Burke said GVK, a conglomerate with interests in airports, hotels and transportation as well as energy, must work with national authorities to secure approval for the project, vital to its coal ambitions.
The government of Queensland last week gave the go-ahead for GVK's Alpha project in a move that would normally trigger a 30-day deadline for approval from the national government. But Burke said the new state government was "shambolic" and that its approval fell short of national standards.
"I am stopping the clock on the Alpha project," Burke told reporters. "We have no interest in a delayed process. But we are not willing to compromise environmental standards."
Burke said officials from GVK were already working with the federal government and that he was confident a decision could be made ahead of the company's planned final investment decision on the Alpha project later this year.
GVK said it will provide the needed information to the federal government for the environmental assessment and expects a positive outcome soon.
The scheme is the front-runner among several projects in the untapped Galilee Basin in Queensland, where rival Indian group Adani Enterprises is planning an A$10.9 billion coal and rail project.
The decision reflects a tougher national approach to projects which could impact on the Great Barrier Reef off the Queensland coast, and follows a U.N. report warning of threats to the reef posed by industrial developments.
Galilee Basin projects have been slow to win approvals and face strong opposition from environmentalists worried about coal burning, port dredging and ship traffic along the fragile reef.
But the conservative Queensland government, elected in March, is keen to clear a backlog of resource schemes, with around A$51 billion of projects awaiting approval.
The resources industry and national and state governments have been working to streamline the environment approvals by setting up uniform standards, so companies only need to go through environment assessments once.
But Burke said the new Queensland state government had done a "hopeless level of work" on the Alpha project, putting the streamlined approval process at risk.
"I'm not prepared in the name of cooperation to abandon environmental protection," Burke said. "In terms of the company, it is a significant inconvenience."
$1 = A$1.0288 Reporting by James Grubel; additional reporting by Sanjeev Choudhary in NEW DELHI; editing by Joseph Radford and Jason Neely