Aims: To isolate and characterize endophytic diazotrophic bacteria from a semi-aquatic grass (Typha australis) which grows luxuriantly with no addition of any nitrogen source. Methods and Results: Ten endophytic diazotrophic bacteria from surface-sterilized roots and culm of T. australis were isolated and screened for plant growth-promoting activities employing standard methods. Based on the rate of nitrogenase activity, indole acetic acid (IAA) production and phosphate (P) solubilization, one root isolate namely GR-3 was found to be the most efficient one. This isolate was identified as Klebsiella oxytoca on the basis of 16S rDNA sequence analysis. Amplification of nifH by polymerase chain reaction (PCR) and detection of dinitrogenase reductase by western blot confirmed the diazotrophic nature of GR-3. It was tagged with gusA fused to a constitutive promoter and the resulting transconjugant was inoculated onto endophyte-free rice variety Malviya dhan-36 seedlings to express cross-infection ability which resulted in a significant increase in root/shoot length and chlorophyll a content. Conclusions: Roots and culm of T. australis harbour several endophytic diazotrophic bacteria. One root isolate, identified as K. oxytoca GR-3, seems to be an efficient plant growth-promoting bacterium. Significance and Impact of the Study: Plant growth-promoting properties of GR-3 suggest that this promising isolate merits further investigations for potential application in agriculture.