A dispute over nuclear inspections is threatening to undo the 2007 six-party disarmament deal, with Pyongyang accusing Washington of violating its dignity by seeking Iraq-style "house searches."

Hill is expected to raise the possibility the North could provide verification of its disarmament efforts to ally China rather than sharing with a broader set of nations, US State Department officials said Wednesday.

State Department spokesman Sean McCormack declined to offer details of Hill's effort other than to say China could play the "special role" it has in the past "as a repository for documents and information."

However, a senior US official said the deal could involve Washington's removing Pyongyang from the blacklist if North Korea submits a plan to verify its disarmament to China, which chairs the six-party negotiations.

Hill crossed the heavily fortified inter-Korean border at the truce village of Panmunjom around 11:00am (0200 GMT), the US military said.

"I would say we are in a difficult and very tough phase of negotiations," he had told reporters late Tuesday after talks in Seoul with his South Korean counterpart Kim Sook.

The North has announced it will begin work to restart its plutonium reprocessing plant as early as this week. It has barred UN atomic inspectors from the building.

Pyongyang accuses Washington of breaching the six-nation deal by failing to remove it from a terrorism blacklist. The United States says the North must first agree procedures for outside verification of a nuclear declaration it submitted in June.

The North counters that verification is not part of this stage of the agreement.

Outlining the sequence of steps, The Washington Post reported that after the United States provisionally removes the North from the blacklist, China would announce North Korea's acceptance of the verification plan.

This would allow Pyongyang to assert that the delisting occurred before the verification plan was in place.

The United States and its partners are anxious to begin verifying documents North Korea submitted in June -- to China -- that detailed its nuclear programs.

Hill will have talks with the North's nuclear negotiator Kim Kye-Gwan but it was unclear who else he would meet or how long he would stay.

"US Assistant Secretary of State Christopher Hill and his party arrived here today," the North's official news agency announced in a one-sentence report.

The State Department said Hill was scheduled to go on to China on Friday and then Japan, but the schedule may change.

Despite the nuclear tensions South and North Korea have agreed to hold working-level military talks Thursday, the first since conservative President Lee Myung-Bak took office in Seoul in February and promised a firmer policy on North Korea.

The North staged a nuclear weapons test in October 2006 but weeks later announced a return to negotiations with South Korea, the United States, China, Russia and Japan.

It shut down its Yongbyon complex in July 2007 and began disabling the plants in November that year. In return Pyongyang was to receive one million tons of fuel oil or equivalent energy aid and Washington was to remove it from the blacklist.

North Korea is estimated to have produced enough plutonium for around six bombs before Yongbyon was shut down. Analysts believe it could produce enough material for one more bomb if it resumes reprocessing spent fuel rods.

A South Korean government source quoted by Yonhap said Wednesday that increased activity had been spotted near the site of the 2006 nuclear test.

It was unclear whether the nation was preparing for a second test, or simulating activity to try to pressure the United States over the deadlocked disarmament deal, the agency said.

related report
US seeks special Chinese role to break NKorea deadlock
The United States is working on a compromise deal to break the North Korean nuclear deadlock by letting Pyongyang provide verification of its disarmament efforts to ally China rather than sharing with a broader set of nations, State Department officials said Wednesday.

The officials expected US envoy Christopher Hill to raise the possibility during a visit to North Korea Wednesday and Thursday in a bid to end a row over Pyongyang's demands to be removed from a US blacklist of countries supporting terrorism.

Department spokesman Sean McCormack declined to offer details of Hill's effort other than to say China could play the "special role" it has in the past "as a repository for documents and information."

However, a senior US official said the deal could involve Washington's removing Pyongyang from the blacklist if North Korea submits a plan to verify its disarmament to China, which chairs the six-party negotiations.

"That's a potential solution here," the official told reporters when asked about news reports of such a deal.

It was conceivable "that you had agreement to the verification protocol deposited with the Chinese, and then others would take the steps they're obligated to," the official told reporters on the condition of anonymity.

The official said the original idea was for North Korea to give the plan to all of its five negotiating partners -- South Korea, China, Japan, Russia and the United States -- rather than just to its ally China.

Outlining the sequence of steps, The Washington Post reported that after the United States provisionally removes the North from the blacklist, China would announce North Korea's acceptance of the verification plan.

The United States and its partners are anxious to begin verifying documents North Korea submitted in June -- to China -- that detailed its nuclear programs.

McCormack firmly denied reports that Hill was carrying proposed changes to the actual verification plan.

"No, he was not, not in terms of the substance and changing the verification proposal, no," he said.

The dispute is threatening to undo a February 2007 six-nation deal which led the North to shut down its plutonium-producing plants.

Pyongyang accuses Washington of breaching the six-nation deal by failing to remove it from the blacklist. The United States says the North must first agree procedures for outside verification of the nuclear declaration.

The North counters that verification is not part of this stage of the agreement and accuses Washington of violating its dignity by seeking Iraq-style "house searches."

The North has announced it will begin work to restart its plutonium reprocessing plant as early as this week. It has barred UN atomic inspectors from the building.

The State Department said Hill met with North Korean representative Kim Gye-Gwan on Wednesday and was to hold more talks with North Korean officials on Thursday before returning to South Korea.

Hill will "have an opportunity to brief the Japanese and Russians in either Seoul or Beijing," it said in an e-mail. He will travel to Beijing on Friday and then to Tokyo before returning to Washington on Saturday.

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