The leaders of the world's two biggest regional enemies have agreed to hold only their countries' second ever summit in an attempt to open a "new phase of peace".

Kim Jong-Il, the hardline Communist North Korean leader, and President Roh Moo-Hyun of South Korea have announced that they are to meet in Pyongyang on August 28 for three days of talks aimed at developing a formal peace treaty.

It will be only the second top-level meeting between the nations, which were divided after the Korean War of 1953. The first such summit, held in 2000, was held with the aim of ushering in a new era of reconciliation marked by joint economic projects and family reunions. But the moves faltered amid concern among the international community that North Korea's secretive and restrictive regime was continuing to develop nuclear weapons. It tested its first such weapon last October.

Today's announcement appeared to signify a new rapprochement, as North Korea takes steps to end its international isolation amid grinding poverty and chronic economic problems.

The North’s official Korean Central News Agency said that the meeting, which Kim Jong-Il was believed to have proposed, would be "of weighty significance in opening a new phase of peace". In a statement, the North Korean leader added: "Recently, inter-Korean relations and the political situation are improving. The current timing is the most appropriate period."

President Roh, meanwhile, said it would help to normalise the North’s relations with the world. "The second inter-Korean summit will provide fresh momentum to improve North Korea’s relations with international society," his spokesman said. "The preparations should be focused on making practical progress in Korean Peninsula denuclearisation, inter-Korean peace, arms control and economic co-operation. We need to have comprehensive and creative approaches."

Earlier this year, the Communist state gave indications that it was prepared to move in from the cold when it signed a six-nation agreement in which it agreed to shut down its atomic programme. Last month, it appeared to have fulfilled an essential part of the deal when it shut its Yongbyon reactor, which produced plutonium. Its pledge to disable its nuclear weapons is in return for energy aid worth hundreds of millions of dollars and major diplomatic and security benefits.

Kim Man-Bok, the chief of South Korea’s National Intelligence Service, today disclosed that he had secretly visited North Korea twice earlier this month to arrange the summit.

It comes only days after a firefight was reported between soldiers at the border between the two countries, during which no one was injured.

Times Recommends

• Would you live on the wrong side of the Berlin Wall?
• Wish you were here, says Iraq tourist board
• Russian policeman’s corruption plea to Putin