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In a joint statement expected later on Friday, the two sides will announce a new round of reunions from September 26 to October 1, according to South Korea's Yonhap news agency reported.

The agency also said that South Korea had withdrawn its demand that the joint statement refer to South Korean prisoners of war and civilians believed to have been kidnapped by the North during the Cold War era.

The South Korean government says 494 of its citizens, mostly fishermen, were seized in the decades following the war while more than 500 prisoners of war were never sent home after the signing of the 1953 ceasefire.

Pyongyang insists it is not holding anyone against their will even though some abductees have escaped to the South.

Demands withdrawn

"As the North is limiting these talks to the reunions around Chuseok, we are going to give priority to that issue," Yonhap quoted a South Korean official as saying.

The talks on the reunions are being held at the Mount Kumgang resort in North Korea [AFP]

Seoul also dropped demands for the reunions to be held on a regular basis to accommodate many elderly people who may die before having a chance to be reunited with their relatives.

Officials have reportedly agreed to select 100 people on each side and locate their relatives across the border.

The reunions normally last for two or three days.

The recent North-South discussions on family reunions are the latest sign of an possible thaw in cross-border relations.

Over the past year, North Korea has stoked tensions across the Korean peninsula with nuclear and missile tests.

However, in recent weeks, the North has put forward a series of conciliatory gestures, such as releasing a South Korean worker held for more than four months and agreeing to lift restrictions on border crossings.

The North also freed two American journalists following a trip to Pyongyang by former Bill Clinton, the former US president, earlier this month.