WASHINGTON (Reuters) - The Obama administration unveiled long-awaited rules on Friday to bolster oversight of so-called "fracking" on public lands, seeking to allay concerns over the technology that has spurred a U.S. boom in shale gas drilling.

The Interior Department proposal would require that companies obtain government approval to use hydraulic fracturing, or fracking, in drilling for natural gas on federal lands.

The rules would not affect drilling on private land, where the bulk of shale exploration is taking place. Still, the administration has said it hopes the rules could be used as a template for state regulators.

The proposal would also require that companies disclose the fluids used in hydraulic fracturing after completing the process, which involves injecting water, sand and chemicals under the ground to extract fuel.

"As we continue to offer millions of acres of America's public lands for oil and gas development, it is critical that the public have full confidence that the right safety and environmental protections are in place," Interior Secretary Ken Salazar said in a statement.

The administration has walked a fine line on natural gas drilling, lauding the potential of the country's vast shale gas reserves, while stressing the need to ensure drilling is safe.

Critics say shale gas drilling, and fracking in particular, have fouled water sources and polluted the environment. Green groups and some lawmakers have called for more federal regulation of fracking, which is mostly handled at state level.

Shale gas drillers argue that oversight of the drilling boom is most effectively managed by states and say excessive regulation could staunch production that is creating jobs and helping U.S. energy security.

"The bigger priority for us is to make sure we aren't overlaying a process here that is going to harm the ability of states to continue their regulation of our production," said Marty Durbin, of the American Petroleum Institute, an oil and gas industry group.

(Reporting by Ayesha Rascoe; Editing by Dale Hudson and Gerald E. McCormick)