The failing North Korean nuclear deal appears to have been saved from collapse after the United States agreed to remove the isolated dictatorship from its list of terrorist states.

But the move has alienated the government of Japan, which opposes such concessions until Pyongyang has told the truth about Japanese citizens which it abducted during the Cold War.

The fragile agreement on North Korean nuclear disarmament, finally agreed last year after four years of tortuous negotiation, had appeared to be in danger after North Korea threatened to reactivate the plutonium reactor where it has generated the material for an unknown number of nuclear warheads.

It accused the Bush administration of reneging on an agreement in June to “delist” North Korea from the registry of countries regarded as state sponsors of terrorism. But the US demanded that it first agree to allow international inspectors to visit suspected nuclear sites to confirm that North Korea has owned up to the full extent of its nuclear programme.

According to US and South Korean media reports, and informed sources in Tokyo who spoke to The Times, American and North Korean negotiators reached a compromise agreement in Pyongyang last week. President Bush will agree to delisting, reportedly as early as today, in return for North Korea’s agreement on steps to be taken to verify its nuclear declaration.

The details of the “verification protocol” are still unclear, and will be scrutinised by those who suspect Mr Bush of caving into the North Korean leader, Kim Jong Il. Conservatives, including some of the president’s former neo-con supporters, object on principle to the deal of cutting a deal with a regime which they regard as murderous, illegitimate and inherently untrustworthy.

Yesterday, South Korea’s foreign minister confirmed that a compromise had been made on one of the most contentious elements of the nuclear negotiations – a US claim that North Korea has a secret uranium enrichment programme, apart from the plutonium reactor which it publicly acknowledges.

Pyongyang denies this and, having formerly insisted that the disputed uranium programme be included in a verification agreement, the American team has dropped this demand for the time being.

“The US government is expected to make a decision [on delisting] in the near future," Yu Myung Hwan said in Seoul. “Discussions on a verification protocol are still underway . . . The issues of the uranium enrichment programme and others . . . will be handled afterwards as we cannot deal with all the issues at the same time.”

Other key points concern US demands that international inspectors be allowed to make spot checks on suspected nuclear sites and collect soil and air samples.

But North Korea may be pressing for an even more ambitious concession – direct military talks with the US. Since the Korean War petered out in an Armistice in 1953, its antagonists have never signed a peace treaty. A commentary this week in the North Korean state paper, Chosun Shinbo, suggested that this may now be on the table.

“North Korea and the US need to establish a milestone for downgrading their hostilities,” the newspaper said. “North Korea will not abandon nuclear weapons unilaterally while there is the prospect of potential war on the Korean Peninsula … . A discussion on military affairs is unavoidable for the resolution of the nuclear issue.”

The “delisting” of North Korea will cause particular dismay in Japan, which is pressing Pyongyang to provide more information about its own citizens who were abducted and brought to North Korea in the 1970s and 1980s. The fact that the US has chosen to reward the North before this issue has been resolved is regarded by many in Tokyo as a betrayal.

Many in the Japanese government regard Washington’s rush to move ahead with the nuclear agreement as a transparent attempt to come up with a concrete foreign policy achievement in the last weeks of a struggling administration – and at the expense of a loyal ally.

Yesterday, the Japanese cabinet of the new prime minister, Taro Aso, extended for a further six months sanctions against North Korea imposed after its first and so far only underground nuclear test in 2006.

“We have never signalled our approval regarding delisting [North Korea] as a terrorist-supporting state,” Japan’s chief cabinet secretary, Takeo Kawamura, said yesterday. “And so under such circumstance, we have extended the sanctions as had been planned.”

Reports in US newspapers quoted unnamed intelligence officials saying that North Korea was showing signs of preparing for a second nuclear test – although whether this was a bluff intended to put pressure on the negotiations was not clear.

On Wednesday, North Korea test fired conventional missiles into the sea, and appears to be preparing to fire several more. On Thursday. inspectors from International Atomic Energy Agency, who had been overseeing North Korea’s suspension and dismantlement of the Yongbyon plutonium reactor, were denied access to the site.

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