Yoon, 61, who started work in an underground bunker with a briefing on North Korea, takes office at a time of high tensions on the peninsula, with Pyongyang conducting a record 15 weapons tests since January, including two launches last week.

The former prosecutor, who won the election by a razor-thin margin in March, said in his inaugural speech that he would consider sending transformative levels of economic aid to the North -- but only if Pyongyang first gives up its nuclear weapons.

"If North Korea genuinely embarks on a process to complete denuclearisation, we are prepared to work with the international community to present an audacious plan that will vastly strengthen North Korea's economy and improve the quality of life for its people," he said.

Yoon's predecessor Moon Jae-in pursued a policy of engagement with Pyongyang, brokering summits between North Korean leader Kim Jong Un and then US president Donald Trump. But talks collapsed in 2019 and diplomacy has stalled since.

"While North Korea's nuclear weapon programmes are a threat not only to our security and that of Northeast Asia, the door to dialogue will remain open so that we can peacefully resolve this threat," Yoon added.

But the offer of "audacious" aid is a dud, analysts say: North Korea, which invests a vast chunk of its GDP into its weapons programmes, has long made it clear it will not make that trade.

"Since 2009, North Korea has stated it will not give up its nukes for economic incentives," Park Won-gon, a professor at Ewha University, told AFP.

"Yoon's comment will only trigger Pyongyang, who will see it as an attack."

Kim does not want massive economic growth because achieving this would require opening up North Korea's information ecosystem, said Chad O'Carroll of Seoul-based specialist site NK News.

"Ideological pollution would rapidly steep in, a key risk for Pyongyang's ruler... Yoon's denuclearisation plans won't go anywhere... because the 'carrot' is actually poisonous," he wrote on Twitter.

- Unpopular move -

During his inauguration speech, Yoon said South Korea was facing "multiple crises", citing the Covid-19 pandemic, global supply chain issues, economic woes and new armed conflicts.

"Such complex, multi-faceted crises are casting a long and dark shadow over us," Yoon said, adding that he was confident the country would emerge from its current difficulties.

But Yoon is not likely to have an easy ride, taking office with some of the lowest approval ratings of any democratically elected South Korean president at 41 percent, according to a Gallup poll.

The biggest reason for Yoon's unpopularity, the survey found, was his decision to move the presidential office from the decades-old Blue House to the former defence ministry in downtown Seoul.

The hasty, expensive move soured public sentiment, with critics claiming it was unnecessary and a security risk.

Yoon said the Blue House, on a site used by the Japanese colonial administration from 1910 to 1945, was a "symbol of imperial power", claiming the relocation would ensure a more democratic presidency.

The Blue House grounds will be opened to the public as a park.

The inauguration was held outside Seoul's National Assembly, featuring marching army bands, soldiers in ceremonial dress, and a 21-gun salute.

Around 40,000 people attended with local reports saying it was the country's most expensive such event by far, at 3.3 billion won ($2.6 million).

US President Joe Biden -- who is set to visit Seoul later this month -- sent a high-profile delegation headed by Douglas Emhoff, husband of US Vice President Kamala Harris.

Japan and China also sent high-level representatives, with Yoon saying he wanted to mend sometimes fractious relations with regional powers.

"At a time when the rules-based international order is under threat, the strategic collaboration between Japan and South Korea... is needed more than ever," Japan's Foreign Minister Yoshimasa Hayashi said after attending the inauguration.