The two sides began two days of talks to discuss ways to revitalise their jointly-run industrial estate at Kaesong just north of the border, Seoul's unification ministry said.

The two sides agreed last week to hold the meeting at Kaesong, the latest in a series of apparently conciliatory moves by the North after months of tensions.

But the meeting appeared in doubt Friday when the North launched a verbal broadside against the South -- hours after it had agreed to accept food aid from Seoul.

Its National Defence Commission, the top decision-making body, threatened to cut all dialogue and cooperation unless the South apologises for an alleged contingency plan to handle regime collapse in the North.

The commission also warned of a "holy war" against the South should there be any attempt to carry out the plan.

"North Korea has taken a stance that is hard to understand," South Korea's Foreign Minister Yu Myung-Hwan told a forum, noting its "serious threats" while at the same time accepting aid and agreeing to the Kaesong talks.

The JoongAng Daily, in an editorial Tuesday headlined "The North's erratic behaviour" agreed.

"Given the North's recent behaviour, it seems as though it would be impossible for even God to understand North Korea's policies and actions toward South Korea," the paper said.

The cash-strapped North has faced tighter United Nations sanctions since its nuclear and missile tests last year. It appears eager to promote economic projects with the South despite the fiery rhetoric.

Last week Pyongyang called for the resumption of lucrative tours by South Koreans to the North.

The Kaesong estate employs 42,000 North Koreans in 117 South Korean firms. Wages are paid in dollars to state bodies and not to the workers directly, another source of hard currency for Pyongyang.

The unification ministry said Tuesday's talks were being held in a "serious and practical mood" and the North made no mention of Friday's statement.

But six-nation nuclear disarmament negotiations remain stalled despite a visit to Pyongyang last month by US envoy Stephen Bosworth.

The North now insists that sanctions be dropped before it returns to the forum it abandoned last April. It also wants early talks on a pact to formally end the 1950-53 Korean War, to build confidence in the nuclear negotiations.

The United States and South Korea have dismissed both demands.

Minister Yu, quoted by Yonhap news agency, said talks on a peace pact could come only after the North starts to shut down its nuclear programmes.

"North Korea is trying to shift responsibility for the stalemate in six-party negotiations to the outside world," he said.

South Korea's chief negotiator in the six-party forum, Wi Sung-Lac, will visit Washington this week for talks with his US counterparts on ways to restart the talks which group the two Koreas, China, the United States, Russia and Japan.

Wi said he would meet Bosworth and other officials.

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