Moon has long championed engagement with Pyongyang and used the South's 2018 Winter Olympics to build a diplomatic rapprochement that climaxed with a landmark summit between Kim Jong Un and US President Donald Trump in Singapore.

But negotiations have been deadlocked since a second summit collapsed in Hanoi last year over sanctions relief and what the North would be willing to give up in return.

Pyongyang has since ended its moratorium on nuclear and intercontinental ballistic missile tests and says it will not return to talks unless Washington first meets all its demands in full.

It has also suspended virtually all inter-Korean cooperation and said it has nothing to talk about with Seoul.

"It is clear there is a lull in talks," Moon acknowledged in his annual New Year press conference. "Since a prolonged lull in dialogue can set back the situation, it is not desirable."

The two sides do not have "much time to spare", he added.

"Once a full-scale presidential race begins, it may not be easy for the US to make time for talks with North Korea."

Despite the stand-off, he insisted further discussions were still possible, saying the North is "leaving the door to dialogue open".

"We can't be optimistic about talks between the North and South and between the North and the US, but I don't think we are at a stage where we have to be pessimistic," he said.

- Dovish approach -

Pyongyang has repeatedly excoriated Seoul and Moon in recent months, only last weekend dismissing the South's relaying of birthday greetings from Trump to Kim as "frivolous" and "somewhat presumptuous".

But Moon doubled down on his dovish approach at Tuesday's press conference, insisting Pyongyang had never said no to talks on cross-border cooperation.

"There has not yet been any message refusing talks between the North and South to discuss the improvement of inter-Korean ties or inter-Korean cooperation," he added.

He raised the prospect of re-starting Southern tourist visits to the North and pushing for sanctions exemptions if necessary, while reiterating his call for talks with Pyongyang on forming unified teams to march together and compete at the Tokyo Olympics in July.

This year's Games could reprise their role as "a venue to promote peace on our Korean peninsula", he said.

But Moon's suggestion comes with sporting ties in a deep freeze -- North Korea gave up any prospect of its women's football team playing in Tokyo rather than take part in a qualifying competition in the South next month.

"Further attempts to court the North without being in touch with reality would only invite more mockery from Pyongyang," the Korea Herald newspaper said in an editorial Tuesday.