Witnesses said about 15,000 riot police stepped closer to the gates of Hyundai's main factory complex, preparing to evict some 5,000 workers and their families camping inside the sprawling plant in protest at Hyundai's layoff plans.

A mediation team from the ruling National Congress for New Politics said it would hold talks with the Hyundai Union and management to find a solution.

"We have so far listened to what the two sides had to say,"Cho Sung-joon, a lawmaker from the delegation, told reporters. "We believe there is a room for compromise."

Hyundai's management last week offered to cut the number of workers to be laid off to 615 from an earlier 1,569 after many applied for a voluntary retirement package.

The union rejected the offer.

The seven-member mediation team, led by party vice-president and former labour activist Roh Moo-hyun, arrived in Ulsan on Tuesday evening and began marathon talks with union leaders in a bid to break a labour-management deadlock at the country's largest car maker.

But the negotiations have so far failed to bring Hyundai's union and management together for face-to-face talks.

An international labour group on Thursday urged Hyundai Motor to withdraw its layoffs plan and asked the government to refrain from using force to break up the strike.

"We protest Hyundai Motor's announced programme for massive layoffs of Hyundai Motor workers and demand that Hyundai Motor immediately rescind this plan," Tsuneo Hata, regional representative of the East Asian Regional Office of the International Metalworkers Federation, told reporters.

"The longer such standoffs continue, the more dangerous the situation becomes and the more tempting the recourse by the police to force," Hata said.

Hyundai workers have erected a barricade using equipment from the Ulsan factory they have occupied since July 20.

They have positioned 60 new cars behind the barricade and around a four-foot by three-foot (1.2m by 90 cm) tank of gasoline with five or six tanks of liquefied petroleum placed nearby.

Ranks of riot police, backed by water cannon, teargas and bulldozers, are deployed around the factory.

"We oppose the use of state police force to resolve the Hyundai Motor workers' union and Hyundai Motor dispute and call for a peaceful solution through sincere dialogue with the union," Hata said.

He also called upon the government to recognise the rights of workers to take industrial action in pursuit of just demands and withdraw the arrest warrants issued for the leaders of the Korea Metal Workers' Federation.

He told Reuters later if the government ignored the demands, his federation, representing more than 20 million metal workers worldwide, would consider boycotting all Hyundai consumer goods.

Separately, the hardline Korean Confederation of Trade Unions said on Thursday it had sent a letter of complaint to the International Labour Organisation over Hyundai's actions.

"The Korean Confederation of Trade Union believes the termination of jobs undertaken by Hyundai Motor management is a calculated action to destroy the union, which has become one of the most important trade unions in Korea," the letter said.

Hyundai's layoff move was the first since the National Assembly passed a law in February making it easier for companies to shed workers in a country accustomed to lifetime job security.