North Korean leader Kim Jong-Il and President Roh Moo-Hyun called for a peace treaty formally ending the 1950-53 Korean War, which cemented the division of the peninsula.

"The South and North share the view that they should end the current armistice system and build up a permanent peace system," the declaration said, according to pool reports.

"The South and North agree to cooperate for the leaders of the three or four countries concerned to meet on the Korean peninsula and declare the end of the war."

The two leaders, in the declaration, also agreed to make joint efforts to ensure that six-nation agreements on shutting down the North's nuclear programme are implemented smoothly.

Kim and Roh agreed to hold summits frequently in future.

They said their Prime Ministers would meet in Seoul next month.

They pledged to work to end military hostility along the world's last Cold War frontier, and declared the disputed western sea border -- scene of bloody naval clashes in 1999 and 2002 -- a "peace zone".

Defence ministers will meet next month to discuss details of the peace zone.

The two agreed to expand economic cooperation and joint projects and construct a joint shipbuilding complex at Nampo southwest of Pyongyang. A direct air route will open between Seoul and the North's scenic Mount Paektu to promote tourism.