VIENNA, Austria - North Korea moved closer Thursday to relaunching its nuclear arms program, announcing that it wants to reactivate the facility that produced its atomic bomb and banning UN inspectors from the site.

The United States said the moves did not mean the death of international efforts to persuade the North to recommit to an agreement that offers it diplomatic and economic concessions in exchange for nuclear disarmament.

Despite the gloomy implications of North Korea's moves, they could be a negotiating ploy, since the year needed to start its reprocessing plant could be used to wrest more concessions.

John Bolton, who has served as U.S. ambassador to the United Nations and U.S. undersecretary of state in charge of the North Korean nuclear dossier, suggested the North's tactics were working.

Bolton, a critic of what he considers American leniency with North Korea who remains well-connected with senior U.S. administration officials, told The Associated Press that Washington was planning to meet the communist country's key demand "within a week" by removing it from a State Department list of countries that sponsor terrorism.

That would be a significant move because the disarmament deal is bogged down over U.S. refusal to do just that until the North accepts a plan for verifying a list of nuclear assets that it submitted to its negotiating partners.

It was unclear whether the United States would settle for less than the full accounting it had asked for before the North walked away from the talks.

White House press secretary Dana Perino said a nuclear disarmament verification protocol remained essential to taking North Korea off the terrorism list.

She added, however: "If we can get a verification protocol that we are satisfied with, then we would be able to fulfill our side of the bargain."

North Korea's plans were revealed by the International Atomic Energy Agency. The North had already banned IAEA inspectors from the reprocessing plant last month after demanding they remove agency seals from the facility. But the experts continued to have access to the rest of the site until Thursday.

"Since it is preparing to restart the facilities at Yongbyon, the DPRK has informed the IAEA that our monitoring activities would no longer be appropriate," the UN nuclear watchdog said, using the formal acronym for North Korea.

It said the North "informed IAEA inspectors that effective immediately access to facilities at Yongbyon would no longer be permitted" and "also stated that it has stopped its (nuclear) disablement work."

The IAEA said its small inspection team would remain on the site until told otherwise by North Korean authorities, and the State Department suggested it does not view North Korea's statement as the end of a six-country agreement on ending the country's atomic program.

"This is a regrettable step, but one that is reversible," State Department spokesman Sean McCormack said.

Still, the North Korean reversal compounds the White House's nuclear setbacks with time running out for President George W. Bush, who leaves office early next year.

Washington has been successful in persuading the international community to do nuclear trade with India. In doing so, it has set up lucrative access for U.S. firms looking to provide nuclear technology worth billions of dollars, reversing more than three decades of U.S. policy that has barred the sale of nuclear fuel and technology to a country that has not signed international nonproliferation accords and tested secretly developed nuclear weapons.

But along with the North's resurgent atomic defiance, Iran remains a nuclear thorn it the Bush administration's side as it continues to flout UN sanctions and western pressure to give up uranium enrichment, a potential pathway to the bomb.

Tensions also rose elsewhere on the Korean peninsula, with the North warning the South against sending naval ships into its waters and threatening warfare as it reportedly shifted an arsenal of missiles to a nearby island for more test launches.

The warning came hours after a South Korean newspaper reported that a U.S. spy satellite detected signs the North had positioned about 10 missiles near the disputed sea border after test-firing two short-range missiles on Tuesday. The Chosun Ilbo report cited an unidentified South Korean official.

The two Koreas have remained technically at war since the Korean War, which began June 25, 1950, and ended in 1953 with an armistice, not a peace treaty. North Korea does not recognize a sea boundary unilaterally drawn by the UN.

Yongbyon, located about 100 kilometres north of Pyongyang, has three main facilities: a five-megawatt reactor, a plutonium reprocessing plant and a fuel fabrication complex.

The reactor is the centrepiece of the complex, with the facility stretching more about two kilometres along the Churyong River, satellite images show.

The reprocessing centre to the south of the reactor is capable of extracting weapons-grade plutonium from spent fuel rods. Thousands of them remain in storage but would likely be moved to the reprocessing plant as a next step. South of the reprocessing centre, fuel rods are made from natural uranium in the fuel fabrication complex that lies tucked into a bend in the Churyong River.

A second reactor with the potential to produce much higher quantities of plutonium has not been completed.