The talks were held in Panmunjom, the truce village in the Demilitarized Zone that splits the peninsula, with the North's group walking over the Military Demarcation Line to the Peace House venue on the southern side -- just yards from where a defector ran across in a hail of bullets two months ago.

"The North side proposed dispatching a high-level delegation, a National Olympic Committee delegation, athletes, supporters, art performers, observers, a taekwondo demonstration team and journalists" to the Games, the South's vice unification minister Chun Hae-Sung told journalists.

Looking businesslike, the South's Unification minister Cho Myoung-Gyon and the North's chief delegate Ri Son-Gwon shook hands at the entrance to the building, and again across the table.

In accordance with standard practice in the North, Ri wore a badge on his left lapel bearing an image of the country's founding father Kim Il-Sung and his son and successor Kim Jong-Il.

"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."

The atmosphere was friendlier than at past meetings, and Cho told Ri that Seoul believed "guests from the North are going to join many others from all around the world" at the Olympics.

"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 the North's leader Kim Jong-Un and US President Donald Trump trade personal insults and threats of war.

Kim indicated in his New Year's speech that the North could take part in the Games and Seoul responded with an offer of high-level dialogue.

Last week, the hotline between the neighbours was restored after being suspended for almost two years.

Issues still to be settled include the question of joint entrances to the opening and closing ceremonies, the size of Pyongyang's delegation and their accommodation -- widely expected to be paid for by Seoul -- as well as any linked discussions.

Only two winter sports athletes from the North have qualified for the Games so far, but hundreds of young, female North Korean cheerleaders have created a buzz at three previous international sporting events in the South.

The group may stay on a cruise ship in Sokcho, about an hour's drive from the Olympic venue, which would enable their movements to be closely monitored and controlled.

A high-level delegation accompanying the team could include Kim's younger sister Yo-Jong, who is a senior member of the ruling Workers' Party, according to South Korean reports.

- Beyond the Games -

"In terms of pending issues regarding the improvement of inter-Korean ties, it won't be easy to immediately reach an agreement."

It was not clear whether the North had sought to discuss a permanent end to large-scale annual military drills between Seoul and Washington.

The North's Rodong Sinmun newspaper -- the ruling party's official daily -- made no mention of the talks Tuesday but said that US policies aimed at sanctions and pressure against North Korea had failed and Pyongyang had become "an international nuclear power".

The United States and South Korea agreed last week to delay their Foal Eagle and Key Resolve military 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.