BEIJING, Feb 13: North Korea agreed to take steps towards nuclear disarmament under a groundbreaking deal struck on Tuesday that will bring the communist state some $300 million worth of aid.

Under the agreement, which was reached by six countries in Beijing after nearly a week of talks, Pyongyang will freeze the reactor at the heart of its nuclear programme and allow international inspections of the site.

But North Korea later appeared to backtrack, with official media saying the deal only required the ‘temporary suspension’ of its nuclear sites.

The Korean Central News Agency (KCNA) said the US was misinterpreting the agreement, which referred only to the ‘temporary suspension of the operation of its nuclear facilities’. The text of the deal makes no reference to a temporary suspension.

The United States also agreed to resolve the issue of frozen North Korean bank accounts in Macau’s Banco Delta Asia within 30 days, chief US negotiator Christopher Hill told reporters.

Washington will initiate, under a separate bilateral forum, a process to remove North Korea from its list of state sponsors of terrorism, four months after the secretive state’s stunning test of a nuclear device.

“We think it’s a very important first step toward the denuclearisation of North Korea and the Korean peninsula,” White House spokesman Tony Snow said in Washington.

Mr Snow insisted the ultimate goal is: “When this is concluded there will be no nuclear technology in North Korea, period.”

He said, however, that Pyongyang faces the continuing threat of international sanctions if it reneges on the deal.

Mr Hill and North Korean envoy Kim Kye-gwan warmly shook hands and patted one another’s arms during a closing reception.

The KCNA said the other parties decided to offer economic and energy aid equivalent to one million tons of heavy oil in connection with North Korea's ‘temporary’ suspension of the operation of its nuclear facilities.

Washington-led trade sanctions, which anger Pyongyang, will also begin to be lifted from a country President George Bush once lumped with Iran and Iraq on an ‘axis of evil’.

The deal says North Korea must take steps to shut down its main nuclear reactor within 60 days. In return, it will receive 50,000 tons of fuel oil or economic aid of equal value.

The North will receive another 950,000 tons of fuel oil or equivalent when it takes further steps to disable its nuclear capabilities, including providing a complete inventory of its plutonium -- the fuel used in Pyongyang's first nuclear test blast in October.

The one million tons of fuel would be worth $300 million at current prices.

The steps for now do not involve providing 2,000 megawatts of electricity -- at an estimated cost of $8.55 billion over 10 years and about equal to North Korea’s current output -- that South Korea pledged in Sept 2005 and which is due after North Korea's denuclearisation is completed.

The proposed plan hammered out by the two Koreas, the United States, Japan, Russia, and China will only be the first step in locating and dismantling North Korea’s nuclear arms activities, leaving many questions to future negotiations.

One area of uncertainty is whether Pyongyang has a highly enriched uranium programme, as alleged by Washington. North Korea has not acknowledged the existence of such a programme.

DOUBTS VOICED: As details of the draft leaked out, Japan was already voicing doubt that any agreement could be made to stick.