The North is now attending the Student Games
More than 200 North Korean athletes, officials and journalists have arrived in South Korea for the World Student Games, after days of political wrangling.
The North Korean delegation flew south for the games at Daegu, after reversing a decision to withdraw from the event over a recent anti-North flag-burning protest in the South Korean capital Seoul.
The row erupted at a delicate time for inter-Korean relations, just a week before crucial talks on the North's nuclear weapons programme are due to get under way.
In a further sign that relations between the two sides are thawing, both Koreas have agreed in principle to field a unified team for the 2004 Olympic Games in Athens.
The agreement was announced on Wednesday in a joint statement by the two delegations attending the Daegu games.
Athletes from North and South Korea marched behind a single "Korean Peninsula" flag for the first time at the 2000 Sydney Olympics but they competed as separate countries during the actual competition.
North Korea also sent a large delegation to last year's Asian Games, participating for the first time in a major sporting event hosted by South Korea.
The BBC's Charles Scanlon in Seoul says the North's participation in those games was seen as an important symbol of warming ties.
But he says the next big test will come next week in Beijing, when the North Koreans sit down with their Asian neighbours and the United States for six-party talks aimed at putting a stop to Pyongyang's nuclear ambitions.
The North Korean delegation arrived in the South on Wednesday waving their hands and smiling at supporters waiting for them at the airport.
"Brothers in the South, we are happy to see you," said Jon
Guk-man, head of the North Korean delegation.
In Beijing on 27 August
North and South Korea, the US, China, Japan and Russia taking part
Will address North Korea's nuclear programme
Reuters news agency said South Korea was paying all the expenses for the North's team, which organisers consider a major draw in an event short on big sporting names.
North Korea's about-face over its decision to boycott the games came after South Korean President Roh Moo-hyun expressed regret for last Friday's anti-North protest, describing it as "inappropriate".
Mr Roh's government has been struggling to maintain good relations with Pyongyang, despite signs that the North is pushing ahead with the development of nuclear weapons.
His conciliatory remarks contrasted with comments by US President George W Bush on Monday, who said that North Korean leader Kim Jong-il was a "dangerous man" who loved "rattling sabres".
Pyongyang has repeatedly warned that the US must change its "hostile policy" towards the North if forthcoming Beijing talks, which will also include Washington, are to make progress.