On a visit Thursday to neighboring Japan, the IAEA chief condemned North Korea's October 9 nuclear test but said that dialogue was the best way to move forward.

"I am pleased to note the recent agreement to resume the six-party talks," ElBaradei said in a speech in Tokyo.

"The IAEA stands ready to work with the DPRK and with all others towards a solution for this issue that would make use of the agency's verification capability," he said, using the North's official name, the Democratic People's Republic of Korea.

IAEA involvement would help "assure the international community that all nuclear activities in the DPRK are exclusively for peaceful purposes," he said.

North Korea agreed on October 31 to return to six-nation negotiations on ending its nuclear program. But two days of talks in Beijing this week between US and North Korean negotiators failed to set a date for the new round.

"The DPRK nuclear test is a clear setback to the nuclear non-proliferation regime and while the test is a matter of deep concern and regret, it unfortunately came as no surprise," ElBaradei said.

He stressed the importance for the international community to engage in an "immediate and sustained dialogue" to address the underlying causes.

North Korea has pushed for bilateral talks with the United States, but President George W. Bush's administration has said it will only negotiate through the six-way talks.

The talks also bring together China, Japan, Russia and South Korea.

ElBaradei, who won the Nobel Peace Prize last year for his efforts to stem nuclear proliferation, urged existing nuclear powers to set an example.

"The countries that have nuclear weapons should get rid of them and move toward nuclear disarmament," he said.

"Unfortunately the movement by the weapons states on their commitment to disarm has been sluggish at best," he said, noting that 27,000 warheads exist worldwide more than 30 years after the Non-Proliferation Treaty was concluded.

"We will continue to have countries that will be tempted to develop nuclear weapons, either because of a sense of insecurity or because they think that nuclear weapons will bring power and prestige.

"To change that environment, in my view, the weapons states need to lead by example," he argued, calling for a universal ban on nuclear testing through the enforcement of the Comprehensive Nuclear Test Ban Treaty.

The CTBT, which bans all nuclear explosions, cannot come into force until it is ratified by the required 44 states which had nuclear research or power facilities when it was adopted in 1996.

ElBaradei also stressed the importance of atomic power as an environmentally friendly alternative to fossil fuels to help alleviate global poverty.

"Nuclear energy at least for the next 50 years or so has to be fully utilised as part of the energy mix to deal with the energy shortage," with roughly two billion people around the world lacking access to electricity.

"Without electricity there is no development. Without development there is misery; there is violence; there is civil war," he warned.

ElBaradei arrived in Japan on Wednesday and was meeting later Thursday with Foreign Minister Taro Aso. He heads to China on Monday.

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