Military talks aimed at easing high tensions between North and South Korea broke down Wednesday when the North's delegation walked out, Seoul's defence ministry said.

The two sides had been meeting for the first time since the North's deadly shelling of a South Korean island on November 23, which briefly sparked fears of war.

A ministry spokesman told AFP the delegates even failed to discuss when to meet again. "Under the current situation, we can say the talks have collapsed."

Washington said that Pyongyang's walkout was a "missed opportunity" on the part of the North.

After two days of working-level discussions aimed at setting the agenda for a high-level military meeting, North and South remained far apart.

The South demanded an apology at the proposed senior-level meeting for two bloody border incidents last year.

Four people including civilians died in the shelling of Yeonpyeong island near the disputed Yellow Sea border.

The South also accuses the North of torpedoing a warship last March near the border with the loss of 46 lives, a charge it denies.

Earlier on Wednesday the South agreed in principle to hold separate Red Cross talks on reunions for families separated since the 1950-53 war. But the unification ministry said these could not now go ahead.

The island bombardment, the first attack on a civilian area in the South since the war, sparked outrage in South Korea.

Seoul said Pyongyang must apologise at high level talks both for the shelling and the warship sinking and punish those responsible.

The North, however, said the talks should focus on halting all military actions that can be considered provocative by the other side.

Pyongyang flatly denies involvement in the sinking of the South's warship. It says its attack on Yeonpyeong was in response to a South Korean live-fire drill there, which dropped shells into waters claimed by the North.

The South's chief delegate Colonel Moon Sang-Gyun told reporters the North had described the warship allegations as a plot instigated by the United States to justify a policy of confrontation on the peninsula.

It repeated its earlier claim that the Yeonpyeong bombardment was caused by provocations from the South.

Moon said he rejected the assertions as "nonsense".

In Washington, State Department spokesman Philip Crowley said that "North Korea needs to improve" its relations with the South and "clearly this was an important opportunity to demonstrate its sincerity."

"Clearly having North Korea walking out puts it in the category of a missed opportunity," he added.

North and South had agreed to talk soon after their respective superpower patrons, China and the United States, called jointly for inter-Korean dialogue.

"Both sides are now under international pressure to continue dialogue," Dongguk University Professor Kim Yong-Hyun told AFP.

"I don't think the collapse of talks will escalate tensions again. After a cooling-off period, I believe the North will make a fresh proposal for a new round of military talks."

After dire predictions late last year of nuclear war, the North abruptly changed tack in January and launched a spate of appeals for dialogue.

Some analysts say the events fit a pattern in which the North manufactures a crisis, and then suggests negotiations in hopes of aid concessions.

South Korea's JoongAng Ilbo newspaper said Wednesday that a North Korean diplomat, at a meeting in New York last month, had asked the United States to resume the food aid it suspended in 2009.

China for its part is striving to revive six-party talks that offer the North economic and diplomatic benefits in return for nuclear disarmament.

But the United States says the North must mend ties with the South before the nuclear dialogue can resume.

North and South were briefly "in the same bed but dreaming different dreams", said Hong Hyun-Ik of Seoul's Sejong Institute think-tank.

"The South believes the North's dire economic situation will force it to accept responsibility for the incidents, but the North cannot swallow its pride for the sake of opening talks with the South," Hong told AFP.

"The North will now say to the US and China that it did all it could to resume dialogue with the South."