"We expect the inter-Korean summit to have a two-fold effect of resolving the North Korean nuclear problem and improving inter-Korean relations since the Feb 13 agreement and the Sept 19 joint declaration (on North Korea's denuclearisation) are currently in the implementation stages," said Unification Minister Lee Jae-joung.

The two Koreas simultaneously announced the August summit at 10 am on Wednesday.

The three-day meeting between President Roh Moo-hyun and North Korea's Kim Jong-il comes seven years after the first landmark summit, held in Pyongyang in June 2000 between the North Korean leader and former President Kim Dae-jung.

The Uri Party and liberal politicians welcomed the announcement but the Grand National Party condemned the summit as a political ploy to affect voter sentiment ahead of the December presidential election. Critics said the government may have struck "inappropriate deals" with the North to achieve the summit. Cheong Wa Dae denied such allegations. The North Korean leader proposed the meeting, according to Kim Man-bok, chief of the National Intelligence Service. Kim visited Pyongyang twice this month to discuss the details of the meeting. Kim said the agreement was finalized Aug.5.

A preparatory meeting is to be held in the inter-Korean border city of Gaeseong as early as possible to fine-tune the details. The government plans to launch a summit promotion committee headed by the presidential chief of staff and a separate preparation team led by the Unification Minister.

Cheong Wa Dae will present the summit plans to the National Assembly and also to the Cabinet meeting for approval before the president makes an official announcement.

The presidential office declined to comment on the summit agenda, but experts have narrowed it down to the North Korean nuclear program and discussion for declaring a peace regime on the peninsula.

"There is the possibility of the two Koreas issuing a declaration of some kind to reaffirm peninsular denuclearisation," said Kim Tae-woo, senior research fellow at Korea Institute for Defence Analyses.

Earlier, Roh had said while the government was open to a summit with the North, Pyongyang's nuclear issue would have to be resolved.

There has been considerable progress in the six-party talks for denuclearising North Korea, but it is still an on-going process, as a timeline has yet to be set for the complete disablement of the North's nuclear weapons programme and the corresponding economic and political incentives that would be provided to the North are still unsettled. Working level meetings of the six nations negotiating to end North Korea's nuclear ambition are scheduled for next week, ahead of the six-nation talks next month.

Regarding the idea of a peace regime, President Roh has on several occasions supported replacing the current cease fire with an official peace regime.

Humanitarian issues, such as aid for North Korea and future meetings for split families will likely appear on the agenda. Pyongyang may also touch on the South's hostage situation in Afghanistan, pundits said.

On the business front, the two Koreas may reaffirm their mutual support for inter-Korean projects cantering on the Gaeseong Industrial Complex and Mt Geumgang tours.

Measures for easing inter-Korean military tension may not be addressed since the two sides are far from reaching a consensus on any of the related issues such as moving the Northern Limit Line.

That the venue will again be Pyongyang is expected to arouse critics since international customs call for meetings to be based on the principle of reciprocity.

"North Korea suggested Pyongyang because it would be the more dignified place to hold a summit and the president accepted this idea," said the NIS chief.

Seven years earlier during the first summit, the two Koreas promised reunification efforts and economic cooperation.