SEOUL. Dec 31: The United States and North Korea have virtually agreed on a package deal" to resolve their longstanding dispute over Pyongyang's nuclear weapons ca pability. a news report said Friday, reports AP.

• Under the deal. North Korea would be expected to reopen its nuclear facllIUes to international inspections by January. the national Yonhap news agency quoted a senior Foreign Ministry official as saying,

The two sides could qot reach full agreement because of a couple of problems but those remaining problems are insignificant and are not expected to be obstacles." Yonhap quoted the official as say-

ing.

The agency said the United States and North Korea would hold another meeting early next week to seal the "package deal” that also calls for Washington to improve political ties with Pyongyang. Inter-Korea dialogue, suspended over the nuclear dispute, would also reopen as part of the deal.

The United States, closely allied with pro-Western South Korea, has no formal ties with the Communist North. Improve Ues with Washington is one of North Korea's top policy goals.

North Korea, a hard-line Marxist state, says its nuclear programme is for peaceful purposes only but has refuse

outside InspecUons. heightening suspicion that it is developing nuclear weapons.

Officials of the United States and North Korea met in New York Wednesday for the fifth time in December to try to resolve their dispute over Pyongyang's nuclear InspecUon problem.

After the New York meeting,- the two sides reported progress an expressed optimism that the dispute could be resolved peacefully soon.

US State Department press officer David Johnson reported that Washington has “move closer" to meeting its-objec-Uves of getting North Korea to receive International Atomic Energy Agency InspecUons.

North Korea also said a

"breakthrough* was made at the latest New Yorjc meeUng.

The North's official Korean Central News Agency, monitored in Tokyo, said the United States indicated a willingness to meet a longstanding Pyongyang demand for an end to Joint US-South Korean military exercises, usually held each year in March.

We agreed to allow inspection needed entirely for guaranteeing the continuity of (nuclear) safeguards, not routine and ad hoc InspecUon,” the KCNA quoted an unldenU-fled Foreign Ministry official as saying.

The routine inspections remained to be negoUated. he said.