EMMA ALBERICI, PRESENTER: After more than a decade-long stalemate between industry and public health experts, Lateline can report on a breakthrough for a national health labelling system for processed food.

A star system is now likely to be adopted by governments next year to help guide consumers in the fight against obesity.

Margot O'Neill has our exclusive report.

MARGOT O'NEILL, REPORTER: For years public health advocates have lobbied for traffic light labels as the best way to alert busy shoppers to fat and salt in processed food, to help fight the obesity epidemic.

It was a proposal backed by an independent government report, but in the face of industry opposition the Government rejected the idea. Now, to avoid any more delay, public health experts are backing a star system.

MICHAEL MOORE, PUBLIC HEALTH ASSOC. OF AUSTRALIA: For more than 10 years we've been trying to get a clean, clear message on the packets that industry and Government are prepared to work with health groups to get something that consumers can understand easily is actually a really major breakthrough.

MARGOT O'NEILL: Similar to the rating system used on white goods for energy efficiency, the proposed star system for processed food could look something like this.

MICHAEL MOORE: The message will be very, very simple and straight forward: that a, if you like, a five star system is very good for you; something that only has half a star - well sure, you'll eat it occasionally, but it's not a food you would choose for its nutrition value.

MARGOT O'NEILL: Unlike traffic lights, the star system has no negative colour-coding, which was opposed by industry.

MICHAEL MOORE: What they don't like is any form of negativity and red, of course, is a negative, and that's one of the reasons I think they're prepared to look at the star system - that it implies the food's not good for you but doesn't say it's bad for you.

MARGOT O'NEILL: Industry agrees the star system is a breakthrough, although there's no final agreement yet.

GARY DAWSON, AUSTRALIAN FOOD AND GROCERY COUNCIL: It's more a matter of the work that needs to be done. The technical work around making sure it reflects the science - so that's really about ensuring that the star rating system reflects both good nutrients and bad nutrients, if I can put it over-simplistically.

Because at the end of the day it's not a presence of a particular nutrient or even a particular food, it's really about the combination of foods in your diet and beyond that your lifestyle. So that's the first. The second one is, it does need consumer testing. There's no point going down this path if in consumer testing it's found it's not meaningful, that consumers don't understand it.

MARGOT O'NEILL: But public health groups are still uncomfortable abandoning their long-held preference for traffic lights for a system with no evidence behind it.

JANE MARTIN, OBESITY POLICY COALITION: The Government gave us no choice with traffic lights off the table, given the urgency of the problem with poor diets and overweight and obesity. It was critical to move on to develop another scheme.

MARGOT O'NEILL: There are still hurdles ahead. Industry says it won't give up its preference for also including a daily intake guide or DIG - it's own front of pack information panel now widely featured on high volume products, and, it claims wildly understood.

GARY DAWSON: We never saw it as an either/or to be honest. And having invested in DIG it doesn't make sense to take information away.

JANE MARTIN: Well, we know in research consumers find the daily intake guide very confusing, and we in the same vain that we've stepped away from traffic lights as our preferred option, we expect industry to do the same thing and move away from per cent daily intake guides.

MARGOT O'NEILL: Negotiations will continue under the guidance of the Federal Department of Health, but industry and public health advocates hope to have an agreement on a star system ready for state and federal ministers early next year.

Margot O'Neill, Lateline.

EMMA ALBERICI: The author of the Federal Government's independent review of good labelling, Dr Neal Blewitt, told Lateline tonight while a star system would be better than nothing, it would not be as effective and traffic light labelling.