BBC's Andrew Wood: Kim accepts apology

In the first written World War II apology ever issued by Japan to a specific country, Mr Obuchi "sincerely recognised the historical fact that our country inflicted tremendous damage and suffering on the people of South Korea through the colonial rule during a certain period of the past and expressed deep remorse and heartfelt apology over this."

Keizo Obuchi: "Deep remorse"

The declaration was made during a visit to Japan by the South Korean President, Kim Dae-Jung, who said that he was satisfied with the sincerity of the Japanese statement.

"The apology in the declaration is different from previous statements by the Japanese government in terms of form and gravity," he said.

"It's extremely significant that we have turned a new page in our relationship.

Declaration included financial aid

"We must settle the accounts of the 20th century ... as we enter the 21st century," President Kim Dae-jung said.

Andrew Wood: Japan, Korea face common threats

The phrasing of the declaration was negotiated between the two sides, and included in a joint declaration, which also announced that Japan would lend South Korea $3bn to help tackle its economic crisis.

But the thousands of South Korean women forced into sex slavery by the Japanese Imperial Army, angrily rejected Tokyo's apology.

"Today's apology was disappointing as it was not different from the past," said Han Kuk-Yom, of a group representing the former "comfort women" forced into prostitution for the Japanese army.

Kim Dae-jung - satisfied with the apology

"It is regrettable that the apology did not specifically mention the comfort women," she said. Her group wants a direct apology for "crimes" against the women and compensation.

"We will not accept anything less," she said.

Earlier, Japan's Emperor Akihito had also expressed "deep sorrow" over the suffering inflicted by Japan on the Korean people.

He was speaking at a state banquet to welcome the visiting South Korean President.

"The deep sorrow which I feel over this never leaves my memory," the Emperor said, using similar wording to the statement of regret he made to former prisoners of war on his state visit to the UK.

The BBC Seoul correspondent Andrew Wood says the two countries have recently been brought closer together by issues which pose a common threat.

North Korea's firing of a multi-stage ballistic missile over Japan recently brought home a reminder of the possible military threat from Pyongyang. According to the Japanese prime minister's office, proposals for six-party talks on the situation in North Korea will be put to President Kim.

Japan's lengthy financial crisis also worries South Korea, which itself is suffering its worst economic conditions for 40 years.