The comments by Yu Myung-Hwan raised hopes that a mission to Pyongyang last week by chief US negotiator Christopher Hill has been fruitful.

"The US side, although nothing has changed in terms of the substance (of its demand), is showing utmost flexibility," Yu told parliamentarians.

Asked whether the North was also exercising flexibility, Yu said, "Yes."

Hill has reported "very substantive" talks but has given no details.

The six-nation disarmament deal is in danger of collapsing because of a dispute over verification of the North's declared nuclear programme.

The North is bridling at a US-inspired verification plan which reportedly calls for the secretive communist state to give access to undeclared suspected nuclear facilities and to let inspectors take samples of material.

Yu denied a report in a pro-Pyongyang newspaper that the North made a new proposal to Hill and had given the US an ultimatum to accept it. "All that Mr Hill has discussed with the North was the verification issue," he said.

The minister said negotiations currently involve inspections of the plutonium programme which the North declared in June, and not of a suspected secret highly enriched uranium (HEU) programme.

"Basically speaking, verification should cover all nuclear facilities," he said. "However, negotiations at this stage are aimed to discuss ways to verify the nuclear declaration made by the North."

Yu said the HEU issue would also be dealt with at some future stage.

The North denies US claims that it has tried to develop a HEU programme in addition to its declared plutonium operation. It merely acknowledged US concerns about HEU in an addendum to the main declaration.

A South Korean government source quoted by Yonhap news agency said the North, during Hill's visit, had demanded extra aid for any inspections of military facilities.

The communist state asserts that some non-nuclear military equipment would have to be shifted from military bases before any inspection, Yonhap said.

Hill met a senior military officer during his visit.

In 1999, North Korea demanded and obtained large-scale food aid from the US in return for opening a suspected underground nuclear base at Kumchang-ri for inspection. Nothing was found.

Pyongyang accepted the aid-for-disarmament deal in February 2007, just four months after staging a nuclear weapons test.

It shut down its Yongbyon nuclear complex in July last year and began disabling it in November. And in June it handed over a declaration of nuclear activities to China.

But now the North is angry that the US failed to respond by removing it from a terrorism blacklist, as required under the accord. It says it will soon begin work to restart a plutonium reprocessing plant.

Before delisting occurs, the US demands that the North agree on inspection procedures to ensure it is telling the truth in its declaration.

The North says verification is not part of this stage of the agreement, and accuses Washington of seeking Iraq-style "house searches" for atomic material.