SEOUL - NORTH Korea said on Friday it no longer wants to be dropped from a US terrorism blacklist and will rebuild its atomic reactor following a deadlock in an international nuclear disarmament deal.

A foreign ministry spokesman said work has been under way 'since some time ago' to restore the plutonium-producing reactor, in response to the US failure to drop it from the list.

A ministry official earlier in the day had also told reporters at the inter-Korean border village of Panmunjom that the reactor is being restored.

Under a six-party agreement originally reached three years ago on Friday, the North last Nov began disabling the reactor and other plants. It handed over a declaration of its nuclear activities in Jun.

But the US refuses to remove the communist state from the terror list until it agrees on strict inspection procedures to verify the declaration.

The North says verification procedures are not part of the six-party deal and rejects what it calls US attempts to make a 'house-search' of its territory.

The spokesman told the official Korean Central News Agency that Washington's verification demand 'glaringly reveals its true intention to step up its hostile policy toward the DPRK (North Korea) in the end.'

Such a demand is a 'pipedream,' he said.

'Now that the US true colours are brought to light, the DPRK neither wishes to be delisted as a 'state sponsor of terrorism' nor expects such a thing to happen,' the spokesman said.

'It will go its own way.' -- AFP