Mr Downer held talks in Beijing before travelling to Pyongyang
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Australia's foreign minister is in North Korea, urging the Stalinist state to renounce nuclear weapons.
Alexander Downer promised Pyongyang "substantial" benefits in aid and trade if it ends its nuclear programme.
North Korea has threatened to boycott the next round of multi-party disarmament talks due to take place in China, blaming a hostile US attitude.
Mr Downer said last week that North Korea was in the process of building missiles capable of reaching Australia.
The minister travelled to Pyongyang after visiting Beijing for talks on how to break the deadlock over North Korea's ambitions to build the bomb.
Little progress
He said China still intended to host working discussions to prepare the ground for top-level talks in late September, even though Pyongyang appeared to rule out sending a delegation.
Australia is not part of the formal six-nation talks on North Korea's nuclear future, but Mr Downer believes it can play a role in trying to solve the impasse.
Months of intermittent multinational talks have produced little progress.
Correspondents say Australia is well-placed to help because it has diplomatic links with North Korea, as well as good relations with China and the US.
The BBC's diplomatic correspondent Jonathan Marcus says the North Koreans may have decided there is little chance of winning concessions from Washington before US elections in November.
Mr Downer promised Pyongyang rewards if it rejoined the process.
The nuclear dispute has been raging for 22 months
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"We already have some limited aid programmes in North Korea... and if North Korea were to abandon its nuclear programmes, then obviously that would lead to a very substantial increase in Australia's engagement," he told a news conference in Beijing.
The dispute flared up in October 2002, when US officials accused North Korea of running a secret nuclear programme in violation of international agreements.
Since then, there have been a series of six-party talks between South Korea, China, Japan, Russia, the US and North Korea but a deal has yet to be reached.
North Korea has offered a nuclear freeze in return for economic aid, but says it is not getting the necessary US commitments in return.
The US wants Pyongyang to disclose all its nuclear activities and allow outside monitors into the country.