Japan reacted anxiously yesterday to reports that the United States is to remove North Korea from a list of terrorist states, amid concerns that Tokyo is being sidelined in the rush to a Korean peace agreement.

The US Government contradicted earlier North Korean claims that it had agreed to remove the Stalinist dictatorship’s designation as a terrorist state and to lift economic sanctions, as part of talks aimed at disarming Pyongyang of its nuclear weapons. It said that such a step would depend on measures by the North Koreans to dismantle their nuclear plants, as agreed in bilateral talks earlier this week.

Discussion of such a measure has caused nervousness in Tokyo, which fears that in the gathering momentum of the North Korean nuclear talks the US will neglect Japan’s greatest concern - the fate of Japanese abducted by North Korea during the Cold War. Yesterday Japanese and US diplomats did their best to smooth over what threatens to become a divisive issue in the already complex negotiations.

“The United States has notified us that it will not carry forward the US-North Korea relationship by sacrificing the Japan-US relationship,” Nobutaka Machimura, the Japanese Foreign Minister, said in remarks that left no doubt how much is at stake for Japan. As the leaders of 21 Asia-Pacific nations gather for a summit meeting in Australia this weekend, amongthem George Bush and Shinzo Abe, the Japanese Prime Minister, there will be intense diplomatic lobbying over an issue that threatens to cause friction between East Asia’s two most-powerful allies.

During the 1970s and 1980s at least 13, and perhaps dozens of Japanese, were snatched from lonely beaches and taken to North Korea to serve as language teachers to espionage agents. After Kim Jong Il, the North Korean leader, owned up to the abductions, five were returned, but his refusal to account for the fate of the rest has outraged Japanese public opinion.

The families of the abductees have become celebrities, constantly interviewed in the media, and the campaign to return home their loved ones has become one of the motors of Japanese domestic politics, which no government can afford not to take seriously. As a rich neighbour of North Korea, with a strategic stake in the region, it has always been assumed that Japan would play an important role in any disarmament agreement, covering much of its cost - but Tokyo insists that there will be no Japanese contribution until the many questions about the abductions are answered.

As a result, Tokyo has found itself increasingly isolated in the past few months. At the end of last year the Bush Administration abandoned a long-held principle and embarked on one-to-one talks with North Korea after years of fruitless multilateral negotiation. In February, in talks bringing together China, Russia, and South Korea as well as North Korea, the US and Japan, a complicated series of steps were agreed by which Pyongyang would disarm in return for aid and diplomatic recognition.

Privately, the other participants in the Six Party Talks have expressed irritation at Japan’s obsession with the abduction issue. Now Japan fears that with the realistic prospect of a settlement, its greatest concern is being forgotten.

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