Australia is to temporarily ease its national wheat company's monopoly on exports pending the outcome of an inquiry into corruption allegations.
John Howard said the move was for the benefit of Australian farmers
It hopes the move may allow its farmers to win an Iraqi contract, which is under threat due to claims kickbacks were paid to Saddam Hussein's regime.
A judge is examining if the Australian Wheat Board (AWB) made illegal payments under Iraq's oil-for-food programme.
Iraq has suspended trading with the AWB until the inquiry reports in March.
The allegations are threatening Australia's chances of securing a lucrative contract to export 1 million tonnes of wheat to Iraq.
Prime Minister John Howard said the AWB's 65-year monopoly would be temporarily eased to enable other farmers to compete for the tender.
At the same time, Mr Howard said ministerial colleagues would travel to Iraq as soon as possible to try and negotiate a resumption of wheat exports.
Iraq is a key market for Australia's wheat farmers, which export about 2.5 million tonnes a year to the country.
Iraq accounted for about 15% of total Australian wheat exports
However, AWB's relationship with Iraq prior to the overthrow of Saddam Hussein in 2003 has come under close scrutiny.
A United Nations report published last year accused AWB of paying up to $222m to the regime between 1997 and 2003.
It is alleged that under the auspices of the oil-for-food programme - which allowed Iraq to export a limited amount of oil to pay for food - money was channelled to the regime through a Jordanian trucking firm owned by the government.
The AWB, which is listed on the Australian stock market, has declined to comment on the allegations before the conclusion of the inquiry.
Mr Howard announced the temporary lifting of its monopoly - in place since 1939 - to Parliament following a meeting with AWB executives on Wednesday.
"AWB has indicated its willingness on a voluntary basis not to exercise its veto on this tender, if necessary, to secure a positive outcome for Australian wheat growers," he said.
The long-term future of the monopoly was not currently under review, Mr Howard stressed.
Most Australian farmers support the monopoly which they argue enables them to compete with heavily subsidised US exports.