The proposal came a day after North Korean leader Kim Jong Un said that he was "open to dialogue" with Seoul and that Pyongyang may attend the games, set to begin in the South next month.
South Korean President Moon Jae-in welcomed Kim's speech on Tuesday and asked his government to move as quickly as possible to bring North Korean athletes to the Olympics.
However, an "improvement of relations between North and South Korea [must go alongside] resolving North Korea's nuclear programme", he said.
North and South Korea last held high-level talks in December 2015.
Inter-Korean ties have been at their lowest level in decades, with tensions escalating on the Korean Peninsula throughout 2017 over multiple missile launches by the North, as well as the purported test of a hydrogen bomb.
The United Nations Security Council imposed a fresh round of sanctions on Pyongyang over its weapons programme in December, but Kim, in his New Year's Day address, vowed to continue focusing on "mass producing nuclear warheads and ballistic missiles for operational deployment in 2018".
He also warned the United States that he has a "nuclear button" on his desk to use if threatened.
Al Jazeera's Florence Looi, reporting from Seoul, said South Korea and the International Olympic Committee (IOC), after a year of rising tensions, "feel the Winter Olympics could be much safer with the North's participation".
If the talks are realised, South Korea will focus on Olympic cooperation but also discuss improving overall ties, Looi said.
Cho Myoung-gyon, South Korea's unification minister, has proposed that the two Koreas meet at the border village of Panmunjom, our correspondent said.
Two North Korean figure skaters qualified for the games, but Pyongyang's Olympic Committee failed to confirm their participation by an October 30 deadline. However, the IOC could "still give the pair a wild card to participate", Looi said.
The games run from February 9 to 25 in Pyeongchang, a city just 80km from the border between the two Koreas.
Source: Al Jazeera News