Mr Vaile said he received a cable overnight from his Iraqi counterpart Ahmad Chalabi, announcing that Iraq was allocating 350,000 tonnes of a 1.5 million tonne contract to Australia.
Iraq last month suspended its wheat trade with Australia while a corruption inquiry is underway involving Australia's monopoly wheat exporter, AWB, over whether the company paid $200 million in kickbacks to Saddam Hussein's government under the United Nations' oil-for-food program.
But Iraq later agreed to resume imports as long as AWB was not involved.
As AWB has the exclusive right, under Australia's single-desk system, to sell Australian wheat overseas and can veto other companies trying to do so, Mr Vaile said the deal would require "some flexibility exercised by AWB".
AWB has the right to veto bulk exports by another company, however has promised it will not do so.
"We're happy to relax the veto for this one particular tender," AWB chairman Ian Donges told AAP.
Mr Vaile said the deal, worth at least $70 million, is guaranteed to go ahead "provided the price is right".
Iraq is expecting Australia to provide a contract price around the current global price of $212 a tonne.
Mr Vaile said Dr Chalabi's cable specified that an Australian "entity" had to export the wheat.
The trade minister travelled to Baghdad last weekend in a bid to shore up future trade to the country, and praised the Iraqi government's decision to go ahead.
"I can't guarantee that we would have had the opportunity to fulfil this 350,000 tonnes if we had not travelled to Iraq," he said.
The companies most likely to be able to form a consortium to supply the 350,000 tonnes are West Australian-based CBH, ABB (formerly the Australian Barley Board) and east-coast trader GrainCorp.
AWB cables "implicate government"
Meanwhile, opposition leader Kim Beazley said a cable tipping off the government about AWB kickbacks six years ago puts Prime Minister John Howard at the heart of the wheat scandal.
The Cole inquiry into allegations the monopoly wheat exporter paid Saddam Hussein's Iraqi regime $300 million in kickbacks on Thursday released another cable which shows the government was tipped off to concerns about AWB in early 2000.
Sent to the offices of a variety of ministers including Mr Howard and then defence minister John Moore, the cables show that AWB was blaming queries about irregularities in its contracts with Iraq on wheat export competitors.
It comes after revelations a series of cables, detailing Canadian concerns about AWB contracts, were sent to Trade Minister Mark Vaile and Foreign Minister Alexander Downer.
"These cables place John Howard at the very heart of our very worst national scandal," Mr Beazley said.
The ALP leader said it is time Mr Howard fronted up to the Cole Commission and revealed what he knew about the issue.
But Mr Howard said he was not shown the cable, as it was dealt with by others in his office.