Uganda has indicated it will bow to international pressure and amend draconian anti-homosexual legislation that includes the death penalty for HIV-positive people convicted of having gay sex.

Breaking his silence on the controversial bill – which was put forward by a member of the ruling party – Uganda's president, Yoweri Museveni, said it had become a "foreign policy issue" and needed further consultation before being voted on in parliament.

The proposed law, which has been pushed by local evangelical preachers and vocally supported by senior government officials, also threatens life imprisonment for anyone convicted of gay sex.

While broadly supported domestically, the legislation has caused a storm of protest abroad and consternation from western donors who fund a large chunk of Uganda's budget.

Addressing a party conference, Museveni said numerous western leaders had spoken to him about the bill.

"When I was at the Commonwealth conference, what was [the Canadian prime minister, Stephen Harper] talking about? The gays. UK prime minister Gordon Brown ... what was he talking about? The gays," said Museveni.

The US secretary of state, Hillary Clinton, had also called him to express strong concerns about the proposed law, he said. "It's a foreign policy issue, and we must handle it in a way that does not compromise our principles but also takes into account our foreign policy interests."

Museveni said the proposed law did not necessarily reflect party or government policy and his cabinet would discuss the bill with David Bahati, the MP who introduced it, before it was put to a vote.

Homosexuality is already outlawed in Uganda under colonial-era legislation. Such is the stigma attached to gay people that no public figure has ever come out. But in recent years some religious leaders have been warning that tougher measures are needed to prevent an increase in same-sex relationships.

Accusations that gay Europeans are offering money to "recruit" Ugandan schoolchildren – a claim repeated by Museveni during his party speech on Tuesday – also seem to have raised the level of homophobia in the country.

The final impetus for the proposed legislation came after a conference hosted last year by three controversial US evangelists who claimed that homosexuality was a curable habit and warned of the danger of the international gay "agenda". The evangelists have since, however, criticised the severity of the punishments in the proposed law.

Under Bahati's bill, "serial offenders" would join HIV-positive people and those who have sex with under-18s in facing the death penalty if convicted of gay sex. Life imprisonment would apply to those found guilty even of touching someone from the same sex "with the intention of committing the act of homosexuality".

Members of the public would have to report any homosexual activity to police within 24 hours or face up to three years in jail, a provision the bill's opponents say would lead to a witchhunt.

Ugandans living abroad who broke the law could be extradited and punished, under the draft bill.

Before the legislation was introduced to parliament in September, local gay support organisations, whose members already face harassment, threats and workplace intimidation, have been lobbying the government to amend the country's HIV awareness and prevention programmes, which currently exclude homosexuals. But instead of achieving their aims these gay groups would be banned under the new law.

James Nsaba Buturo, minister of state for ethics and integrity, who is a strong supporter of the bill, said before Museveni's speech that it was likely that the death penalty provisions would be dropped because of the international outcry.

But Frank Mugisha, chair of Sexual Minorities Uganda, a Kampala-based coalition of lesbian, gay, bisexual, transgender and intersex groups, said that even if this happened the bill would have "a lot of discrimination in it.

"He [Museveni] seems to be saying that the law should be watered down due to foreign interests. But he should rather be talking about the interests of minorities in Uganda. He should come out and say that the entire bill is just wasting time."