Seoul responded with an offer of a high-level dialogue, and last week the hotline between the neighbours was restored after being suspended for almost two years.

Seoul's five-member delegation, led by unification minister Cho Myoung-Gyon, travelled to Panmunjom in a convoy of vehicles, passing a group of well-wishers holding a banner at a checkpoint leading towards the DMZ.

The North's group, of similar size and led by senior official Ri Son-Gwon, walked over the Military Demarcation Line at Panmunjom for the talks, pictures showed -- just yards from where a defector ran across in a hail of bullets two months ago.

"Let's present the people with a precious new year's gift," said the North's Ri. "There is a saying that a journey taken by two lasts longer than the one travelled alone."

Cho told him that Seoul believed the Pyeongchang Games "will become a peace Olympics as most valuable guests from the North are going to join many others from all around the world".

"The people have a strong desire to see the North and South move toward peace and reconciliation," he added.

- 'Peace Olympics' -

It was a radically different tone from the rhetoric of recent months, which have seen Kim and US President Donald Trump trade personal insults and bellicose threats of war, while Pyongyang has launched missiles capable of reaching the US mainland and carried out its sixth and most powerful nuclear test to date.

Seoul has been keen to proclaim the Games in Pyeongchang, just 80 kilometres (50 miles) south of the DMZ, as a "peace Olympics" in the wake of missile and nuclear tests by the North -- but it needs Pyongyang to attend to make the description meaningful.

If the North agrees, one of the top agenda items will be whether the two Koreas' sportspeople make joint entrances to the opening and closing ceremonies, as they did for Sydney 2000, Athens 2004 and the 2006 Winter Games in Turin.

The size and membership of the North Korean delegation and their accommodation -- widely expected to be paid for by Seoul -- will also be discussed.

Hundreds of young, female North Korean cheerleaders have created a buzz at three previous international sporting events in the South.

"For North Korea to achieve its desired effects and to attract attention, it will have to dispatch its beauty cheering squad," said An Chan-Il, a defector-turned-researcher who heads the World Institute for North Korea Studies.

South Korean reports have suggested the North could send a high-level delegation to the Games including Kim's younger sister Yo-Jong, who is a senior member of the ruling Workers' Party.

- 'Beyond the Olympics' -

The North will probably want to discuss a permanent end to large-scale annual military drills between Seoul and Washington.

The United States and South Korea agreed last week to delay the Foal Eagle and Key Resolve exercises until after the Games, apparently to help ease nerves.

Trump said at the weekend he hoped the rare talks between the two Koreas would go "beyond the Olympics" and that Washington could join the process at a later stage.

But US ambassador to the United Nations Nikki Haley said that there was "no turnaround" in the US stance, reiterating that the North must stop nuclear tests for talks with Washington.