North Korea has agreed to resume talks with the United States and revive reconciliation efforts with rival South Korea after months of increasing tension on the world's last Cold War frontier, a South Korean envoy said Saturday.

The two Koreas "have agreed to restore to normal South-North relations that have temporarily been frozen," the envoy, Lim Dong-won told a nationally televised news conference in Seoul after returning from a four-day trip to the communist North.

Lim also said the reclusive North Korean leader Kim Jong Il "has expressed willingness to open dialogue with the United States, and will accept a U.S. envoy's visit to the North."

Until now, North Korea had balked at Washington's offer to restart talks, and tense relations deteriorated further after President Bush labeled the North Korea part of "an axis of evil" countries that are seeking to develop weapons of mass destruction.

"We're aware of reports that there are indications North Korea may be moving toward dialogue with the United States," State Department spokeswoman Brenda Greenberg said in Washington on Saturday. "We look forward to getting a fuller readout from the South Koreans."

According to Lim, the North Korean leader said he would accept a proposed visit by Jack Pritchard, a U.S. special envoy who met North Korean diplomats in the United States last month. The date of the visit will be set by the two sides, Lim said.

Lim also said he understood that Donald Gregg, a former U.S. ambassador to South Korea, had either arrived in North Korea on a visit Friday or was to arrive Saturday.

After suspending talks with North Korea pending a policy review when he took office, Bush offered last June to resume dialogue with the North to discuss its suspected nuclear weapons program, missile development and massive military deployment near the border with South Korea.

Lim said Kim Jong Il had responded "positively" to a message he conveyed from South Korean President Kim Dae-jung urging the North to break out of isolation and build ties with the outside world. Returning home Saturday at the Panmunjom border post Lim told reporters that his trip to the North "yielded more good results than expected."

The Koreas were divided in 1945 and face each other across a border that is sealed and heavily armed. About 37,000 U.S. troops are stationed in South Korea, a legacy of the 1950-53 Korean War.

Inter-Korean ties warmed after Kim Dae-jung traveled to the North for a historic summit in 2000, but a series of exchanges and talks designed to bring the nations closer together subsequently ground to a halt amid U.S.-North Korea tension.

A joint statement issued simultaneously in the two Korean capitals Saturday called for reunions of separated family members -- an important part of the reconciliation process -- to resume on April 28 at the Diamond Mountain resort in North Korea.

The Koreas also have agreed to resume work on reconnecting a cross-border rail line that was launched in 2000 and build a second rail line across the heavily armed demilitarized zone, the statement said. A North Korean economic survey team will visit South Korea in May, it said.

Also Saturday, the first auto assembly plant in North Korea was opened. The South Korean-owned plant will build Siena subcompact cars, designed by the Italian automaker Fiat SpA, for the market in North Korea, China and Russia's Far East.

Lim said Kim Jong Il reaffirmed his earlier promise to visit South Korea for a second summit with Kim Dae-jung but did not say when. Kim Dae-jung's term ends in February and by law, he cannot seek re-election.

Casting a shadow on his bright assessment of his talks in North Korea, Lim said Pyongyang officials did not respond positively when he urged the country to open its suspected nuclear weapons program to outside inspections.

In a 1994 deal with the United States, North Korea agreed to freeze two nuclear power reactors that Western officials suspected were being used to develop nuclear weapons in return for two replacement reactors of a type that cannot be used for that purpose.

Citing a delay in the $4.6 billion reactor project, North Korea has rejected U.N. inspections of nuclear sites.

The CIA suspects that North Korea may have extracted enough plutonium before the 1994 freeze to make one or two atomic bombs.

North Korea is also believed to have stockpiles of thousands of tons of chemical weapons and missiles that can reach the western U.S. mainland.