The landmark cruise tours to North Korea's scenic Diamond Mountains began three years ago and were seen as a breakthrough in relations between the two Koreas

The move has been strongly criticised by the opposition Grand National Party which said it was a waste of taxpayers' money.

The tours to North Korea's diamond mountain range began three years ago, but have been running at huge losses.

The venture is the only opportunity for most South Koreans to visit the North as the two countries still remain technically at war.

Rescue plan

The KNTO said it would join in the tourism project and would be involved in marketing, promotion and transport to North Korea as well as operating duty free shops and hotels.

Tourism has helped break down decades of mistrust

It also said it hoped to expand tourist ventures to other parts of North Korea in the future.

Hyundai Asan had asked the KNTO for around US$80m in funds to help make the tours profitable.

The government tourism body said it had not yet decided on the level of funding, nor where the funds would be drawn from.

Landmark venture

The landmark cruise tours to North Korea's scenic Diamond Mountains began three years ago and were seen as a breakthrough in relations between the two Koreas.

But the venture has lost Hyundai hundreds of millions of dollars, forcing the company to reduce the number of tourist cruises and warning that it may have to halt them altogether.

Under its deal with the North, Hyundai had agreed to pay US$12m a month in return for exclusive rights to operate the project. But the high tourist numbers never materialised.

Earlier this month the North finally agreed to lower the tourist fees and reopen an overland route between the two countries to the mountain resort - a move which would dramatically lower the cost of the tours.