A method is provided for forming a three-layer cladding tube having an outer substrate, a zirconium barrier layer, and an inner liner having alloying elements, in which the zirconium barrier layer (located between an outer substrate and inner liner) is at least partially alloyed with alloying elements that impart resistance to corrosion. The barrier layer has a diffusion layer extending from its inner surface (facing the fuel) to the barrier layer's interior (the interior being defined between the barrier layer's inner and outer surfaces). At the interior edge of the diffusion layer, there will be substantially no alloying elements beyond those normally present in zirconium. The methods of forming such structure include a diffusion anneal of a three-layer cladding in the range of 650.degree.-1000.degree. C. for times between about 1 minute and 20 hours. This anneal drives some of the alloying elements from the inner liner into the zirconium barrier layer to form the diffusion layer. The exact time and temperature depends upon the fabrication stage at which the heat treatment occurs.