Australia may overturn its opposition to joining the China-led Asian Infrastructure Investment Bank after the UK opted to sign up to the institution against the wishes of Washington.

The rethink by one of America’s key allies — alongside Japan and South Korea — that has not yet applied to join the $50bn bank before the March 31 deadline will further irk Washington, which is already angered by the UK ‘s move to become the AIIB’s maiden G7 member.

“I note that the UK has indicated an intention to sign up for the negotiations, the New Zealanders before Christmas signed up for the negotiations, the Singaporeans likewise, the Indians likewise,” said Tony Abbott, Australia’s prime minister.

“We’re looking very carefully at this and we’ll make a decision in the next week or so,” he told The Australian newspaper.

The Obama administration is concerned that China is building a new generation of international development banks that could rival Washington-based institutions. It says it is not opposed to the AIIB but US officials fear it could become an instrument of Chinese foreign policy if Beijing ends up having veto power over the bank’s decisions.

Canberra initially decided not to join following a cabinet debate that exposed tensions between economic ministries keen to sign up and a more sceptical foreign ministry.

The UK’s move last week to join the AIIB has reopened the debate over whether Australia’s national interests lie with bolstering economic ties with China or deferring to the concerns expressed by its key military ally, the US.

“The UK joining the bank has given a good pretext for the government to rethink its original decision,” said Kerry Brown, director of the China Studies Centre at Sydney university. “There is a feeling it acted as a bit of a poodle of the US and it should take a more independent stance.”

The issue is politically fraught for Australia. Canberra must balance its rapidly growing economic relationship with China, which is its biggest trading partner, against its military alliance and close friendship with the US.

Julie Bishop, Australia’s foreign minister, said on Monday that Canberra remained concerned that China has a 49 per cent shareholding in the bank, while the largest partners in other existing multilateral organisations retained a shareholding of 20 per cent.

“We want to ensure that anything that we invest in is meeting the very high standards of the kind of multilateral institutions that Australia has supported in the past,” she said.

Ms Bishop told the Financial Times in a recent interview that Australia did not have to choose between China and the US as partners in the Asia-Pacific region.

“It is not a zero-sum game,” she said. “We balance many relationships in our region and beyond.”

South Korea’s government has remained tight-lipped on the subject of joining the AIIB, despite heavy domestic media speculation on the subject. Last week the Maeil Economic Daily, a leading business newspaper, reported that Seoul had won Washington’s blessing for South Korean entry to the AIIB, provided China’s proportion of the bank’s capital was reduced.

Seoul’s finance ministry responded to that report with a terse statement saying simply that “nothing has been decided”. But it is engaged in ongoing talks with both China and the US regarding joining the bank, one senior ministry official said.

“At the moment we need to consider all our options,” he said, citing considerations including investment opportunities for South Korean companies. But the US government had made clear, he said, that “at the moment they don’t want Korea to join the AIIB — they think that it is not clear on governance and safeguards”.

These concerns were shared by Seoul, a second ministry official said, saying that South Korea would need more assurances on governance if it were to join up.

“So far China hasn’t showed what kind of benefits there would be from joining,” said Kim Tae-hyo, a Sungkyunkwan University professor who was foreign affairs adviser to former president Lee Myung-bak.

China’s assistant foreign minister Liu Jianchao, in the middle of a four-day trip to Seoul, told reporters on Monday that he had “explained the progress” on setting up the AIIB to his South Korean counterpart, Lee Kyung-soo. “I expressed hope again that South Korea will become a member of the bank,” he said.

Mr Liu spoke shortly before the arrival of Daniel Russel, the US assistant secretary of state for East Asian affairs, who arrived from Washington on Monday for a 24-hour visit to Seoul.

Japan has indicated that it is unlikely to join the AIIB and, like the US, was taken aback when the UK signed up. Traditionally, Japan has always appointed the head of the Manila-based Asian Development Bank, so its influence is directly weakened by China’s creation of an alternative.

Japan questions the AIIB’s governance, given the large share of the capital coming from China, and has also raised doubts about the financial liability for members if the AIIB makes unsustainable loans.

“We are cautious about participating,” said Fumio Kishida, foreign minister, at a briefing last week.