Sept. 3 (Bloomberg) -- North Korea said the U.S. agreed to remove the communist country from its list of state sponsors of terrorism and lift all economic sanctions, a claim the U.S. denied.

``The U.S. decided to take such political and economic measures for compensation as delisting the DPRK as a terrorism sponsor and lift all sanctions,'' an unidentified North Korean spokesman said in a report carried by the official Korean Central News Agency. The DPRK stands for the Democratic People's Republic of Korea.

The spokesman said the decision was made during Sept. 1-2 talks in Geneva, where North Korea agreed to dismantle its nuclear plants this year. Assistant Secretary of State Christopher Hill, speaking to reporters in Geneva yesterday, said only that that there had been ``considerable discussion'' of terms under which North Korea might be dropped from the terrorism list.

``I don't want to get into some of the specific things that we're prepared to do,'' Hill told reporters yesterday. Nancy Beck, a State Department spokeswoman, said today that she had nothing to add to Hill's comments.

``It's wrong,'' said Gordon Johndroe, a spokesman for the National Security Council at the White House. ``I know it's not accurate but I don't have any thing to add to it,'' said Johndroe, who commented during a refueling stop at Diego Garcia military base as President George W. Bush traveled to Sydney.

North Korea agreed on Feb. 13 with the U.S., South Korea, Russia, China and Japan to dismantle its nuclear program in exchange for 1 million metric tons of fuel oil or the equivalent in aid, along with other political concessions.

The country has shut down and sealed its Yongbyon reactor, including a reprocessing plant that produced enough fuel for several atomic weapons, according to the U.S. Central Intelligence Agency.

Reactor Shutdown

The 5-megawatt reactor at Yongbyon made enough plutonium to produce one nuclear bomb a year and operated alongside a reprocessing plant that separates plutonium from spent fuel, Robert Einhorn, a senior adviser at the Center for Strategic and International Studies' International Security Program in Washington, said in February.

During the Geneva talks, North Korea and the U.S. ``discussed the issue of taking practical measures to neutralize the existing nuclear facilities in the DPRK within this year and agreed on them,'' the North Korean spokesman was quoted as saying in the government news agency's report.

Hill said yesterday the dismantlement plans included uranium enrichment programs that the U.S. has suspected North Korea of secretly developing, prompting a nuclear crisis in 2002. The communist state has publicly denied having any such program.

Airliner Downed

North Korea was put on the list of state sponsors of terrorism in 1988, after its agents were implicated in the bombing of a South Korean passenger airliner the year before that killed all 155 people on board.

Designation as a state sponsor of terrorism results in U.S. sanctions, including curbs on economic aid and a ban on arms- related sales.

South Korea's Foreign Minister Song Min Soon told reporters in Seoul today that the country was ``guardedly positive'' about North Korea's agreement to dismantle its nuclear plants.

Later this month, the six nations will discuss how the accord is implemented, Song said.

The six-nation talks, which have been held since 2003, are expected to convene in Beijing. Hill said he wants the meeting to complete a document that pins down the year-end deadline.

To contact the reporter on this story: Bomi Lim in Seoul at blim30@bloomberg.net.

Last Updated: September 3, 2007 23:42 EDT