The North carried out its first atomic test in 2006 in violation of UN resolutions and is now believed to possess dozens of nuclear warheads.

"Even now, nuclear materials sufficient to produce 10 to 20 nuclear weapons a year are still being produced" in North Korea, Lee told reporters at a New Year news conference.

At the same time, the North is continuing to improve its long-range ballistic missile technology aimed at striking the US mainland, Lee added.

"At some point, North Korea will have secured the nuclear arsenal it believes it needs to sustain the regime, along with ICBM capabilities capable of threatening not only the United States but the wider world," he said, referring to intercontinental ballistic missiles.

"And once there is excess, it will go abroad -- beyond its borders. A global danger will then emerge," he said.

Pyongyang has for decades justified its nuclear and missile programmes as a deterrent against alleged regime change efforts by Washington and its allies.

A pragmatic attitude was needed in addressing North Korea's nuclear issue, Lee said, adding the "Trump-style approach" could help in communicating with Pyongyang.

"The suspension of nuclear material production and ICBM development, as well as a halt to overseas exports, would also be a gain," he said.

"It would be a gain for everyone," he added, noting that he had laid out the argument to both US President Donald Trump and his Chinese counterpart Xi Jinping.

Since his inauguration in June, Lee has pushed for dialogue with the North without preconditions, a stark departure from the hawkish approach of his predecessor.

- 'Trump-style approach' -

While Pyongyang has snubbed Seoul's dialogue offers, Lee said Trump could pave the way forward with North Korean leader Kim Jong Un -- with whom the US leader has expressed his affinity over the years.

"President Trump is a somewhat unique figure, but I think that very trait can at times be a significant asset in resolving problems on the Korean peninsula," Lee said.

"The Trump?style approach seems to help when it comes to talking with Kim ... I am willing to play the role of a pacemaker in that process."

Trump met Kim three times during his first term in efforts to reach a denuclearisation deal.

But since his second summit in Hanoi fell through over differences about what Pyongyang would get in return for giving up its nuclear weapons, no progress has been made between the two countries.

Trump had expressed hopes for a meeting with Kim ahead of the APEC summit in South Korea in October, which went unanswered by the North Korean leader.

Recently North Korea accused the South of flying a drone into the border city of Kaesong.

Lee's office has denied it was behind the incursion but alluded it might have been carried out by civilians.

One man has claimed responsibility for the breach, telling local media that he had carried it out to measure radiation levels at a North Korean uranium processing facility.