North Korea has reopened an official Red Cross hotline with South Korea after inviting Seoul officials to working-level talks over the weekend in Kaesong, the joint North-South industrial zone.
In response, South Korea used the restored hotline on Friday to accept the proposal but suggested they be held at the Panmunjom truce village straddling the border.
It also suggested the talks include preparatory work for the ministerial-level meeting.
Restoration of the Red Cross link used for government-to-government communications signals easing tensions after a lengthy crisis triggered by the North's nuclear programme.
Earlier, the North had proposed a working-level meeting on Sunday in the border city of Kaesong, which is in North Korean territory, instead of the higher-level negotiations in Seoul suggested by South Korea on Wednesday.
"It is our view that working contact between the authorities of the North and the South is necessary prior to ministerial-level talks proposed by the South side," a Pyongyang's Committee for the Peaceful Reunification of Korea spokesman said in a statement, carried by the official Korean Central News Agency.
North Korea has yet to respond to the counterproposal of talks at Panmunjom.
Al Jazeera's Harry Fawcett, reporting from Seoul, said that a lot of people are talking about the Chinese influence and that the proposed talks and restored hotline are result of that pressure being put to bear.
The Kaesong complex, established in 2004 as a symbol of inter-Korean cooperation, was the most high-profile casualty of the recent tensions.
Operations ground to a halt after the North pulled all its 53,000 workers out in early April. The South withdrew its managers and officials soon afterwards.
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Resuming operations there is one of the main issues on the agenda for the proposed talks.
The CPRK spokesman also proposed that the talks be held on June 9, three days earlier than the date proposed by Seoul.
The North's offer, which came just ahead of a US-China summit, proposed discussions on a range of commercial and humanitarian issues, from reopening Kaesong to resuming cross-border family reunions.
US President Barack Obama and his Chinese counterpart Xi Jinping will hold a summit in California on Friday and Saturday, at which North Korea is likely to be a leading topic.
China, the North's sole major ally and economic benefactor, has been under pressure from the United States to restrain its neighbour and responded positively to the news.
Fawcett said that there is still the serious issue of North Korea's nuclear programme which has been very staunch since January. He said the US has said it will not talk unless the North puts demilitarisation on the table and takes the right path from its weapons programme.
UN chief Ban Ki-moon - a former foreign minister of South Korea - also welcomed the talks announcement.
"This is an encouraging development towards reducing tensions and promoting peace and stability on the Korean Peninsula," his spokesman said in a statement.