David Gabriel Watson, 33, was jailed in Queensland in 2009 after he admitted the manslaughter of his wife Tina, 26, who drowned during a dive on the Great Barrier Reef.
The sentence was condemned by Mrs Watson’s family and US prosecutors, who have been battling to obtain crucial evidence in the case from Australian authorities.
However, Queensland’s Attorney General Cameron Dick has now agreed to hand over documents to prosecutors in Alabama who want to extradite Watson and try him for murder.
Mr Dick had previously refused requests from Alabama’s Attorney General Troy King until he was assured that Watson would not face capital charges, which carry a possible death sentence.
The deal was only settled after Mr King agreed that US authorities would not pursue the death penalty against Watson, known as Gabe, who is from Alabama.
"I am pleased that Mr King has finally provided an undertaking in appropriate terms, stating that Alabama will not pursue the death penalty in any possible criminal action against David Gabriel Watson in relation to the death of his wife," Mr Dick said in a statement.
"Queensland has always been willing to co-operate with Alabama authorities on this matter. However, we also had to ensure that our actions were consistent with Australia's long-standing opposition to the death penalty."
Mrs Watson, a novice diver, had only been married 11 days when she died during a scuba expedition to a shipwreck with her husband off the coast of Townsville in 2003.
She was pictured lying prone 80ft down on the seabed moments after her death in the background of a fellow diver’s holiday snap.
Watson, a trained rescue diver, who swam to the surface rather than saving her, claimed his wife had got into trouble minutes into the dive and knocked his mask off when he tried to help her.
He told police that she sank too quickly for him to retrieve her and decided to seek help rather than attempt a rescue himself.
One of the dive leaders pulled Mrs Watson, who was still wearing her mask, regulator and tank filled with air, to the surface but efforts to resuscitate her failed.
Australian prosecutors initially charged Watson with murdering his wife by turning off her air supply and holding her underwater after an inquest found that was the likely cause of her death.
The coroner said a possible motive was her modest life insurance policy.
However, the bubble-wrap salesman pleaded guilty to the lesser charge of manslaughter in 2009 and received a one-year term, which was increased to 18 months when the Watson family, who believed the sentence was far too lenient, appealed.
Watson, who has since remarried, is due to be released from jail in Australia in November and is likely be deported back to the US to face a murder charge over his wife’s death. If convicted he could face a lengthy jail term.
Mr King has said he believes Watson devised a plot in Alabama to kill his wife on their honeymoon, which would give the state jurisdiction.
He also says there are no international standards on double jeopardy that prevent the US state from trying Watson again over the death.
Queensland officials gave Alabama prosecutors some evidence earlier this year, but had refused to release any more documents over the death penalty issue.
Australia is strongly opposed to capital punishment. Under the country's Extradition Act, a person cannot be deported to face prosecution on a capital charge, unless there is an assurance the death penalty will not be imposed.
Queensland police have been instructed to hand over the evidence "as quickly as possible," Mr Dick said.
