SEOUL - SOUTH Korea's government said on Friday it will resume funding for private aid projects in North Korea despite Pyongyang's threat to shut the border amid rising tensions.

'We are going ahead with humanitarian aid regardless of the current situation,' said Mr Kim Ho Nyoun, spokesman for the unification ministry, which handles cross-border relations.

Mr Kim said however that the communist North has not responded to the South's appeal for dialogue to ease tensions.

The ministry suspended the funding for private South Korean groups after North Korean soldiers in July shot dead a Seoul woman tourist at the North's Mount Kumgang resort.

The ministry said it would grant about one billion won (S$1.1 million) out of a total four billion won requested by civic groups, after consultations with other government agencies.

After months of frosty relations, North Korea on Wednesday announced it would shut the border from December 1 in protest at what it called Seoul's policy of confrontation.

A total border closure would cripple the Seoul-funded Kaesong industrial complex, a joint project built in the North as a symbol of reconciliation.

The North also closed its Red Cross office in the border village of Panmunjom and cut the organisation's phone lines there.

The North has said it is protesting at Seoul's failure to honour inter-Korean summit agreements in 2000 and 2007.

But it is also furious at the spreading of propaganda leaflets across the border by Seoul activists, and has previously threatened to expel South Koreans from Kaesong in protest.

Seoul says it has asked activists to stop launching balloons laden with leaflets but cannot legally bar them.

In its message on Thursday the South told the North it is trying to stop the leaflets and that it wants to promote joint business projects.

Relations soured after conservative South Korean President Lee Myung-Bak took office in February. He promised to take a firmer line with the North after a decade-long 'sunshine' engagement policy under his liberal predecessors.

Analyst Kim Byung Ki said the North is now testing the strength of the US-South Korea alliance before the Obama administration takes office.

'It is testing the strength of cooperation between South Korea and the United States,' said Mr Kim, a Korea University academic.

'North Korea may try to improve relations with the next (US) government. However, I don't think the administration will sideline South Korea to do so.'

Prof Koh Yu Hwan, a Dongkuk University professor, told reporters that uncertainty over leader Kim Jong Il's health could prolong tense relations.

Kim is widely reported to have suffered a stroke around mid-August.

Should the leader die, Koh said, the military would turn defensive 'and inter-Korean relations will remain tense until a new leadership emerges'. -- AFP