South Korea has said the policy of engagement with North Korea pursued by former liberal presidents failed to curb Pyongyang's nuclear ambitions or improve the lives of North Koreans.

Public frustration was growing in South Korea because relations remained bumpy despite massive aid to its impoverished neighbour, the unification ministry said in its annual White Paper published Wednesday.

"Relations made progress for some 10 years amid increased cross-border activities and economic cooperation projects, but the substance of them did not live up to public expectations," it said.

"The North's economic crisis has not been solved and the livelihood of ordinary North Koreans did not improve at all."

Seoul, under late former presidents Kim Dae-Jung and Roh Moo-Hyun who governed from 1998 to 2008, rolled out policies emphasising dialogue and engagement with Pyongyang.

During this period, two summits were held in 2000 and 2007, leading to a series of reconciliation and economic cooperation projects such as a cross-border tour programme.

The two sides held their first large-scale reunions of families separated by war six decades ago and built a jointly run industrial park where North Koreans work at South Korean factories.

But Pyongyang test-fired a long-range missile and conducted its first nuclear test in 2006. A bloody naval clash in 2002 left six South Korean sailors dead.

Despite massive aid from the South, the North's economy still remains in tatters with no "satisfiable" progress in its human rights record, the ministry's 300-page paper said.

"Dialogue and cooperation on security issues ... have failed to live up to expectations," it said.

The paper called for "reciprocal" cooperation instead of unilateral aid "to forge mutual development of inter-Korean relations".

Relations have been bumpy since South Korean President Lee Myung-Bak, who took power in early 2008, dumped engagement policies and took a hardline stance on Pyongyang.

Ties further deteriorated after Seoul, citing a multinational investigation, accused Pyongyang of sinking one of its warships in March this year, with the deaths of 46 sailors. The North vehemently denied involvement.

Six-party nuclear disarmament talks involving the two Koreas, China, Japan, the United States and Russia, have been at a standstill since December 2008.