ST. JOHN'S, N.L. — Newfoundland and Labrador's natural resources minister backpedalled from her own statement Monday that the province was considering suing Ottawa and Quebec over the highly contentious Upper Churchill Falls hydro project agreement.

Kathy Dunderdale held a news conference earlier in the day to reveal how much the government has spent in preparation of the Lower Churchill project, another energy venture in Labrador.

But the announcement was overshadowed when Dunderdale said the government was contemplating various options -- including legal action against the federal and Quebec governments -- in order to secure redress for the Upper Churchill Falls contract.

"Consideration has even been given to pursuing an action against the federal government, who could've certainly intervened along the development of the Upper Churchill . . . and the people of Quebec who've received the benefit from the Upper Churchill,'' Dunderdale said.

"We're looking at taking an action against the federal government and Quebec with regard to the Upper Churchill contract.''

Hours later at the legislature, Dunderdale, accompanied by Justice Minister Jerome Kennedy, withdrew the remarks.

"I certainly did misspeak,'' Dunderdale told reporters.

"If there is an action to be taken, it will have to be taken by the Innu.''

The government is trying to determine if the Innu Nation of Labrador is entitled to reparations for lands they lost in the development of the Upper Churchill, and if so, who carries the burden of redress, Kennedy said.

The Innu have called on the province to compensate them over the Upper Churchill project before they give their approval to proceed with the Lower Churchill project.

The Innu say they weren't consulted before the province proceeded with the project and lost roughly 6,000 square kilometres of land -- an area the size of Prince Edward Island -- as a result of its development nearly 40 years ago.

The Upper Churchill agreement has been a source of great contention in the province since it was signed with Hydro-Quebec in 1969.

Under that lopsided deal, set to expire in 2041, about $1 billion has flowed into the province's coffers while $19 billion has gone to Quebec, according to the Newfoundland government's estimates.

"If there was a thorn that sticks in the Newfoundland and Labrador psyche, then I would suggest to you that the Upper Churchill is that thorn,'' Kennedy said.

The Newfoundland government has twice launched legal actions challenging the validity of the Upper Churchill contract. Both claims were dismissed by the Supreme Court of Canada.

Dunderdale's gaffe marks the latest blow to the government of Premier Danny Williams, which has been reeling from the recent resignation of its deputy premier over a road funding dispute.

Tom Rideout, a former premier, quit cabinet last week after Williams vetoed a deal that would have funnelled an additional $1 million in unapproved funds to pave roads in Rideout's rural riding.

Two cabinet ministers alleged Rideout intimidated them into giving his constituency more money for various projects -- a claim Rideout denies.

Meanwhile, Dunderdale announced Monday the total expenditures to date on preparing for the Lower Churchill project.

Since the 1970s, the province has spent $247 million to cover various costs, including environmental and engineering assessments.

The province is aiming to have Lower Churchill begin generating energy in 2015, but it faces several hurdles including environmental assessments, a deal to sell its power and a land-claims agreement with the Innu.

The project has been lauded as one of the most promising sources of untapped, clean, renewable energy in North America.