There were fears the plan, part of a $1.26 trillion economic stimulus package for the country, would damage Australia's steel exports to the US which are worth $500 million annually.

"There has been strong opposition expressed by many countries for the negative signals that this provision would send," Australian Trade Minister Simon Crean said.

If the measures are approved, Australian iron and steel producers face being locked out of selling their products to contractors building railways, airports, bridges, canals, dams and tunnels across the US.

But White House spokesman Robert Gibbs has now revealed that the ban is under review.

"The administration is reviewing that provision. It understands all of the concerns," he said.

Experts are undecided what impacts such protectionist measures would have on Australia's largest steel maker, BlueScope Steel, because it produces steel in the US as well as in Australia.

The company has indicated it will put forward a position at its half-year results and interim dividend announcements on February 23.

The Australian Steel Institute also reserved judgment on how the move would affect individual companies but a spokesman said: "We support a level playing field internationally.

"Any development that goes in that direction we are going to support."

Meantime, Federal Treasurer Wayne Swan has rejected calls from Australian Workers' Union secretary Paul Howes, made in Saturday's Mercury, for the Government to rethink its free trade agreements and limit its infrastructure spending to Australian goods and services.

"We can't as a globe and we can't as a nation return to those old protectionist practices which have the potential to make this global recession much worse," Mr Swan said.

Federal Cabinet meets next Monday to finalise the Government's latest response to a flagging economy and the global financial meltdown.

Mr Howes told a union conference on the Gold Coast measures should include government and private money being invested in regional infrastructure projects.