"Hyundai Group should spin off Hyundai Motor," Lee told a forum for local journalists. "If it can't do that now, it must promise to implement it later."

In response to Lee's comments, Hyundai said the group would freeze its plans to spin off more than three-quarters of the group's companies for the time being. "We may resume discussion on the issue after group founder Chung Ju-yung and his top executives return from their trip to North Korea on Friday," said Hyundai Group spokesman SN Kim.

Hyundai had planned to submit its new proposals to the Fair Trade Commission later on Thursday. On Wednesday, Hyundai Group reversed plans to spin off Hyundai Motor and other auto-related units and said instead it would submit proposals to spin off 25 of its 35 companies, including Hyundai Engineering and Construction as well as Hyundai Electronics.

Hyundai said these new proposals followed the Fair Trade Commission ruling that spinning off the auto units would not be approved if Hyundai founder Chung Ju-yung kept his stake in the auto company at 9.1 per cent.

To get around this, Lee said on Thursday Chung should lower his stake to below 3 per cent to allow the spin off of Hyundai Motor.

"The finance ministry shares the Fair Trade Commission's position on the issue," Lee said.

Hyundai Group officials earlier said the founder's shareholdings in the 25 affiliates it now plans to hive off were all lower than 3 per cent each and they expected no problem in obtaining FTC approval. The FTC bars conglomerates from holding more than a 3 per cent stake in any outside firm.

Chung last month relinquished his role as honorary chairman and said the founding family would withdraw from day-to-day management in the group.

However, 84-year-old Chung, who built an auto repair shop he opened in 1940 into a manufacturing empire ranging from semiconductors to ships, led a group of top managers from the group on a fact-finding trip to North Korea on Wednesday.

His son Mong-hun joined his father last month in relinquishing his role in day-to-day operations, stepping down as group chairman to devote himself to Hyundai's investments in North Korea.