South Korea to press North for talks

Ties between the Koreas crumbled over the past year, with the North lashing out at the South's president for ending what had once been a free flow of unconditional aid.

Seoul has instead linked handouts to progress Pyongyang made in nuclear disarmament.

"The government will sincerely urge North Korea to respond to our suggestions for inter-Korean dialogue," the Unification Ministry said in a policy plan for the new year it released with the defence and foreign ministries.

North Korea, with estimated annual economic output of about $20 billion (13.8 billion pounds), has lost out on at least $1 billion in aid the South had been supplying each year because of the strain in ties.

Impoverished North Korea faces a further cut in aid after the United States this month called for suspending shipments of heavy fuel aid to punish Pyongyang for failing to live up to a six-way nuclear deal by not agreeing to a system to check claims it made about its atomic programme.

The Defence Ministry said it wants to work with the United States to bolster its response to any possible North Korean aggression and enhance its surveillance of the reclusive state.

U.S. spy satellites and aircraft monitor activity at the North's nuclear arms facilities and also keep track of missile movements and launches.

The United States has about 28,000 troops in South Korea to support its 670,000 soldiers. The North, which is technically still at war with the South, positions most of its 1.2 million troops near the border with its capitalist neighbour.

South Korean media has reported in the past few days that Seoul would set up a programme to buy the release of more than 1,000 of its citizens held for decades in the North who include civilian abductees and prisoners not released at the end of the 1950-53 Korean War.

The Unification Ministry's policy paper did not outline specific plans on the issue, but said: "(The government) will try to fundamentally solve the issue of the abductees and prisoners of war."

(Reporting by Jon Herskovitz and Kim Junghyun, Editing by Dean Yates)