If the Bush administration was willing to compensate, North Korea "is willing to freeze its nuclear activities based on the graphite-moderated reactors as a starting point for the denuclearization of the country," KCNA said quoting a foreign ministry spokesman.

North Korea has recently made a series of overtures over the long-running nuclear standoff with the United States in an indication of Pyongayang's willingness to negotiate with Washington.

North Korea has previously admitted that it fired up the reactors at its main nuclear complex at Yongbyon, 90 kilometers (50 miles) north of Pyongyang, intensifying the latest nuclear crisis that began in October 2002.

The 15-month standoff started when the United States accused North Korea of running a secret uranium-enrichment program violating a 1994 nuclear safeguard accord to mothball the Yongbyon plant.

Washington soon halted its fuel oil shipments to the energy-strapped communist country. In retaliation, Pyongyang said it reactivated the Yongbyon complex.

North Korea has since claimed that it reprocessed 8,000 spent nuclear fuel rods, which would yield enough plutonium for up to six nuclear bombs. But the North's claims have been met by scepticism here and in Washington.

The North's latest overture followed a visit last week to Yongbyon by two non-government US delegations, the first outsiders allowed in the nuclear complex since international monitors were expelled more than a year ago.

North Korea said Saturday it showed its "nuclear deterrent" to the unofficial US delegations, but stopped short of elaborating what was exactly shown.

US newspapers said Sunday the delegations seemed to have seen reprocessed plutonium, an ingredient for making nuclear bombs, although Keith Luse, a US Congress delegate, referred to the US and North Korean reports as speculative and warned against drawing "premature" conclusions.

Last week, North Korea proposed to refrain from producing and testing nuclear weapons in what it said was a "bold concession" to the United States, in return for concessions from Washington.

Diplomatic efforts to open the second round of six-nation talks aimed at resolving the nuclear crisis have so far failed amid differences over the scope of negotiations.

The first round -- which brought together the United States, North Korea, China, Russia, Japan and South Korea -- ended inconclusively in Beijing last August.

But Chinese State Councilor Tang Jiaxuan, who once served as foreign minister, told visiting Japanese lawmakers in Beijing that he expected the next round to resume in February, according to Japanese newspapers.

Tang has reportedly said the nuclear crisis would not be resolved unless economic aid including energy is provided to the impoverished country.

WAR.WIRE