The two Koreas also agreed at economic cooperation negotiations to reconnect their cross-border railways by the end of the year after a test-run in October, they said in a joint statement.

The rail links have been severed for more than 50 years after being cut off at the start of the 1950-1953 Korean War.

The agreements followed North Korea's announcement Saturday that it would this month return to six-nation talks aimed at ending its nuclear weapons program. The talks stalled more than a year ago.

Seoul had been holding off making a decision on a food assistance package despite the North's repeated request for aid, while urging Pyongyang to return to the stalled nuclear negotiations.

South Korea has said that large-scale inter-Korean economic exchanges, including aid, would be impossible as long as the nuclear crisis was not resolved.

It, however, denied using food aid to put pressure on Pyongyang.

"The South side agreed to offer 500,000 tonnes of rice in a loan to the North side in brotherly love and humanitarianism," South Korean unification ministry spokesman Kim Hong-Je said after the talks.

The rice shipment will be the largest since the two leaders of the Koreas met in 2000. Since that summit, South Korea has shipped an average of 400,000 tonnes of rice in aid or loans to North Korea per year.

The agreement announced Tuesday said the re-linking of the railways would help to expand economic cooperation into developing North Korea's fisheries, light industry and natural resources, the statement said.

The reconnection of the inter-Korean railway lines has been repeatedly delayed by tensions over North Korea's nuclear ambitions.

The two Koreas agreed last year to reopen the cross-border links by October 2004 but failed to do so as the nuclear standoff flared again.

Since the 2000 peace summit, the two sides of the divided peninsula have built two sets of roads and railways -- one across the western part of their heavily fortified border and the other across the eastern section.

One of the railways would re-link South Korea's Seoul to Kaesong, an industrial park that North and South Korea are building together just north of the border, and then go on to Sinuiju, located near the Chinese border.

The sprawling park in Kaesong houses South Korean garment and other labor-intensive industries.

The Seoul-Sinuiju Line will be linked to the trans-China railway and the one in the east to the trans-Siberian railway.

The two Koreas also agreed to hold a new round of economic talks in Pyongyang for four days from September 28.

They have yet to sign a formal peace treaty to end the 1950-1953 War.

The current nuclear standoff flared in October 2002 when Washington accused Pyongyang of operating a nuclear weapons program based on enriched uranium in violation of a 1994 agreement.

North Korea agreed on Saturday to return to the disarmament talks, after a meeting in Beijing between the chief negotiators from North Korea and the United States.

It said Sunday it would "do its utmost" to achieve progress at the fresh round of talks, which involve the United States, the two Koreas, Japan, China and Russia.

The third and last round of talks were held in Beijing in June 2004 and stalled with Pyongyang accusing Washington of a "hostile policy" aimed at regime change in North Korea.