The government official said US satellite images showed brisk construction activities at Kilchu in North Hamkyong Province, 350 kilometers (217 miles) northeast of the capital Pyongyang, the Chosun Ilbo said daily reported.

"US spy satellites has spotted trucks moving briskly and cranes or other equipment stationed at a place in Kilchu in North Hamkyong Province," a South Korean government official told Chosun Ilbo.

"Synthesizing satellite photos and other information, US intelligence authorities concluded North Korea may be preparing a nuclear test in the area and conveyed related photos and analyses to our intelligence authorities," he said.

South Korean military authorities confirmed that a tunnel was being built in Kilchu but refused to link it to a nuclear test, the newspaper said.

"US and South Korean authorities have detected sings of a tunnel being drilled in Kilchu while constantly monitoring it, but it is unclear what the tunnel is for," defense ministry spokesman Shin Hyun-Don said.

"We've not yet seen any signs (of a nuclear test)," Defense Minister Yoon Kwang-Ung said.

US and South Korean intelligence authorities were working closely together in watching for a possible nuclear test by North Korea, a government source told the Chosun Ilbo, the largest circulation newspaper in South Korea.

However Deputy Foreign Minister Song Min-Soon, South Korea's top negotiator to six-way talks aimed at ending the North's nuclear ambitions, on Monday denied Seoul had received any intelligence from Washington about such a test.

A series of media reports have said that the North has been preparing for an underground nuclear test since March and might conduct one as early as June.

The six-way talks, which include the two Koreas, Russia, Japan, the United States and China, have been stalled for nearly a year since a third round of negotiations in June last year.

North Korea boycotted a fourth round scheduled for Beijing last September, citing "hostile" US policy towards the communist state.

Pyongyang announced in February that it possessed nuclear weapons and then shut down its nuclear power plant in April in an apparent bid to unload and reprocess spent fuel to glean more weapons-grade plutonium.

The North is believed to have one or two crude nuclear bombs, according to US intelligence reports.

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