North Korea last month offered to hold high-level military talks with the United States to discuss tensions on the Korean peninsula and nuclear disarmament, a report said Monday.

The North proposed the talks in a letter from its defence minister Kim Yong-Chun to his US counterpart Robert Gates, JoongAng Ilbo newspaper said, citing a South Korean government official.

It said the proposal was delivered to the US embassy in China on January 25, five days after Pyongyang made the same offer to South Korea, which accepted dialogue.

The United States reportedly rejected the offer, saying inter-Korean talks should come first.

The inter-Korean military talks broke down when Pyongyang officials walked out of a preparatory meeting on February 9, after Seoul demanded an apology for the deadly shelling of a border island in November.

Seoul's foreign ministry spokesman declined to comment on the newspaper report, saying it was a matter between the North and the United States.

Despite lambasting the United States as a potential invader, the North has long sought direct negotiations with Washington about its nuclear programmes. It also wants talks on a treaty to formally end the 1950-53 war.

The US says a peace treaty can be considered as part of six-nation nuclear disarmament talks, which have been stalled since December 2008.

Inter-Korean tensions are high after the island shelling, and an alleged torpedo attack by the North on a South Korean warship last March that claimed 46 lives. Pyongyang denies involvement in the sinking.

Yonhap news agency, citing a senior Seoul official, said Sunday the North has started digging tunnels at its nuclear test site in apparent preparation for a third atomic detonation.

Asked about the report, Seoul's foreign ministry said Monday it is watching the North Korean nuclear situation carefully "with all possible scenarios in mind".

The North's disclosure last November of an uranium enrichment programme -- a potential second way to make bombs -- has also raised security fears.

South Korea wants the UN Security Council to debate the programme but China, the North's sole major ally and economic prop, is resisting such a move.

China's vice foreign minister Zhang Zhijun held "friendly" talks Monday with Foreign Minister Pak Ui-Chun during a visit to Pyongyang, the North's official news agency said.

Zhang arrived Sunday and met first vice foreign minister Kim Kye-Gwan, the North's envoy to the six-party talks.

China wants to revive those talks to ease overall tensions on the peninsula. The United States, Japan and South Korea say the North must first mend ties with the South.

Russia is the other member of the forum.