North Korea has decided against returning the captured spy ship USS Pueblo after indicating last month that it might do so, according to a former American official who met with authorities in the North Korean capital last week.

Donald Gregg, president of the Korea Society and a former ambassador to South Korea, said in an interview Wednesday that a deal for the Pueblo was hinted at in an Oct. 3 l has changed. It's no longer an option."

Gregg said it was clear the North Koreans were referring to the nuclear dispute that erupted after Assistant Secretary of State James Kelly charged in an Oct. 3 meeting with Kim that North Korea was secretly pursuing a program to produce highly enriched uranium for nuclear weapons. Two weeks later, the White House disclosed that the North Koreans had acknowledged the secret program, and the Bush administration has refused to resume any negotiations until they verifiably eliminate the program.

An early indication of where U.S.-North Korean relations may be headed could emerge Thursday. An international consortium was to meet in New York to consider suspending U.S. shipments of fuel oil to North Korea as a penalty for the illicit nuclear program. The United States has supplied the oil as part of a 1994 arrangement under which North Korea agreed to end efforts to develop nuclear weapons.

The meeting involves the executive board of the Korean Peninsula Energy Development Organization, comprised of the United States, Japan, South Korea and the European Union.

An administration official said Wednesday he believes the group will decide to allow delivery of a shipment en route to North Korea, but that would be the last one unless North Korea does an about-face on its nuclear weapons program.

Gregg, who served as U.S. ambassador to Seoul during the first Bush administration, said a decision to halt the fuel oil shipments could worsen the nuclear crisis. He said it was clear to him from his talks in Pyongyang that the North Koreans want to resolve the matter through negotiations.

In Gregg's view — not widely shared within the Bush administration — the suggestion of possibly returning the Pueblo was North Korea's way of indicating its interest in improving relations with the United States.

"I thought it was a very good symbol, or could be" of the North's interest in better relations, he said.

He said he had first discussed the Pueblo's return in a visit to Pyongyang last spring.

Gregg said that after he was told that the Pueblo's return to U.S. custody was no longer an option, he asked to visit the ship, which has been docked near Pyongyang in recent years and used as an anti-American museum.

Gregg said the Pueblo was not at its usual mooring and he was told it had been returned to Wonsan, on the opposite coast of North Korea, where it had been held for decades after its capture on Jan. 23, 1968.

The capture of the Pueblo was one of the most shocking events of the Cold War. North Korean patrol boats seized the intelligence-gathering ship in international waters and one of the 83 U.S. crew members was killed. The rest were removed from the ship and held prisoner for 11 months.

According to recently declassified documents, a National Security Agency review of the intelligence losses from the Pueblo and its crew concluded that it was "without precedence in U.S. cryptologic history."

The full extent of the losses resulting from the Pueblo seizure emerged only in 1985 when a spy ring operated within the U.S. Navy by John Walker and others was discovered and found to have passed to the Soviet Union over an 18-year period a variety of information, including the keys to coded U.S. communications.