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UPDATE 1-Adani defers Australian coal project investment decision

* Adani holds out for Australian state royalty deal

* State government looks to spur new mines, gas fields (Adds state premier comment, project details)

MELBOURNE, May 22 (Reuters) - India's Adani Enterprises on Monday deferred a final investment decision on its long-delayed Australian Carmichael coal project as the Queensland state government has yet to sign off on a royalty deal for the mine.

The company had been planning to make a final investment decision (FID) on the 25 million tonnes a year coal mine and rail project by the end of May.

"Adani is advised that the Queensland cabinet did not consider any submission or make a decision on royalties for the Adani project today," said the firm's spokesman in Australia, Ron Watson.

"In light of that, Adani has today deferred a decision by the board on FID until the government makes a decision."

The Queensland government is considering ways to extend royalty payments to promote jobs and investment in a state that has been hammered by the commodities slump over the past five years.

However, the Labor government is running into opposition within its own ranks, after having promised that no taxpayer money would be used to subsidize the controversial Carmichael project in the untapped Galilee Basin.

Queensland Premier Anastasia Palazsczuk said on Monday that the issue had not been discussed by cabinet, but said that any change in the state's royalty regime would not just be for Adani but would be for a range of new mines and gas developments.

"I think that as a government, we can look very clearly at trying to open up the Galilee (and other areas)," she told reporters.

"At the end of the day, it's all about jobs, and that's what Queenslanders want."

Adani has battled green groups over the past six years looking to block what would be Australia's biggest coal mine. Opponents have argued the coal exports would stoke global warming and that the project would require a port expansion that could damage the Great Barrier Reef.

The port expansion is no longer needed as the company has shrunk the first phase of the mine to 25 million tonnes from 40 million tonnes a year, as it looks to make the mine and rail project more affordable at around $4 billion, instead of more than $10 billion.

(Reporting by Sonali Paul; Editing by Richard Pullin and Joseph Radford)