North Korean envoys warned of the approaching "black clouds of a nuclear war" and South Korea said its communist neighbour had reprocessed a small number of spent nuclear fuel rods, a key step in the production of atomic bombs.

The developments could intensify the crisis over North Korea’s suspected development of nuclear weapons, though North Korean delegates in Seoul also pledged to work towards reconciliation with the South.

South Korea’s National Intelligence Service, or NIS, said in a report to the National Assembly that it believed the communist North had reprocessed "a small portion" of the 8,000 spent nuclear fuel rods at its nuclear facilities at Yongbyon.

Reprocessing all the rods could yield enough plutonium for several atomic bombs within months, adding to a suspected arsenal of one or two nuclear bombs, experts say.

Since April, North Korea has claimed that it had all but finished reprocessing the rods. Until now, both the U.S.A. and South Korean officials have expressed doubts about the North Korean claim, speculating that it might be a bluff designed to extract concessions at the negotiating table.

South Korea receives much of its intelligence on North Korea from the U.S.A., which spies on the North with satellites and surveillance aircraft.

Ko Young-koo, NIS director, also said North Korea conducted nuclear-related tests of high explosives at Yongduk-dong, a site west of the Yongbyon nuclear complex. It was unclear whether the tests were recent.

South Korea has been aware of similar tests over the past decade.

A high-level North Korean delegation unleashed belligerent rhetoric on the first of four days of talks in Seoul between cabinet-level delegations.

The meetings are to promote inter-Korean projects, but South Korean officials plan to press North Korea to agree to multilateral talks on nuclear development.

"Our nation faces a stark situation as the black clouds of a nuclear war are coming towards the Korean Peninsula minute by minute," the North Koreans said in a reference to the nuclear dispute.

North Korea has used harsh language for decades, and the U.S.A. and South Korean officials believe it is a tactic designed to escalate tension and pressurise negotiating partners into making concessions.

In an apparent reference to the U.S.A.-led victory in the Iraq war, the statement said "the aggressive forces are getting more frantic with war fever as a result of a war in a different region".

But Kim Ryong Song, North Korea’s chief delegate, said at a dinner banquet hosted by his South Korean counterpart, Unification Minister Jeong Se-hyun, that the two sides should work hard together despite the tense situation.

"At these talks, let’s unite efforts and will, and reach an important agreement and give happiness and hope to our nation," he said.

Desperate for cash, North Korea is pursuing joint economic projects with wealthy South Korea, and often appeals in vain for cross-border solidarity in the face of the U.S.A., the South’s chief ally. The nuclear dispute has hindered progress on reconciliation projects between the two Koreas.

South Korean President Roh Moo-hyun is visiting China to try to enlist Beijing’s help in peacefully resolving the nuclear stand-off. China, which has leverage over North Korea because it is a major source of food and fuel for its neighbour, has said it wants a Korean Peninsula free of nuclear weapons.

North Korea "has to choose the path of peace and coexistence with others", Roh said in Beijing in the first week of July. "No nation in the international community believes that the nuclear project will assure its future."

Tensions flared up last October when U.S. officials said Pyongyang admitted having a secret nuclear programme in violation of international agreements.