Robert Park had expressed "sincere repentance" for his actions which were prompted by "false propaganda" from the West, the North's official news agency said. It did not say when he would be freed.

Park, 28, was held by border guards on December 25 after crossing the frozen border river from China. He carried a letter calling on Kim to free political prisoners, shut prison camps, improve rights and step down.

"The relevant organ of the DPRK (North Korea) decided to leniently forgive and release him, taking his admission and sincere repentance of his wrongdoings into consideration," the Korean Central News Agency (KCNA) said.

The North has said it is also holding an American arrested for illegal entry from China on January 25. That person's motives and identity are unknown and Friday's report did not mention him.

The sanctions-hit North has said it wants to improve relations with the United States after decades of hostility. As a condition for returning to stalled nuclear disarmament negotiations, it wants Washington to agree to hold formal peace talks.

"The North is making a friendly gesture towards Washington as Pyongyang is actively seeking to open dialogue with the United States," Kim Yeon-Chul, director of the Hankyoreh Peace Research Institute, told AFP.

"It also comes after President Barack Obama said that North Korea would remain off the US list of terrorist states."

A senior Chinese Communist Party official will visit Pyongyang next week in what could be an attempt to restart the nuclear talks, South Korea's Yonhap news agency quoted sources in Beijing as saying.

It said Wang Jiarui, head of the party's international department, is expected to meet leader Kim.

KCNA carried what it said was an interview with Park and issued an undated photograph of him.

"I trespassed on the border due to my wrong understanding of the DPRK caused by the false propaganda made by the West to tarnish its image," the Tucson, Arizona, resident was quoted as saying.

Park was quoted as saying that he had been treated "in a kind and gentlemanly manner" and that "religious freedom is fully ensured" in the North.

He allegedly said he was allowed to pray daily, his Bible was returned to him and he was allowed to attend a service at a Pyongyang church.

"I would not have committed such crime if I had known that the DPRK respects the rights of all the people and guarantees their freedom and they enjoy a happy and stable life," KCNA quoted Park as saying.

US and United Nations officials, along with international rights groups, have strongly criticised the North's rights record.

Despite constitutional guarantees, "genuine religious freedom did not exist" in North Korea, according to the US State Department's latest annual rights report.

Jo Sung-Rae, a South Korean activist involved in Park's case, said he did not trust the KCNA interview.

"He is speaking under duress," Jo told reporters. "He might also be a victim of brainwashing and threats in the communist state."

Last August former president Bill Clinton met Kim in Pyongyang to secure the release of two US journalists detained for entering the North illegally.

Pyongyang, which was hit by tougher sanctions for its 2009 nuclear test and missile launches, began making peace overtures to Seoul and Washington after that visit.

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