Oct. 11 (Bloomberg) -- The U.S. removed North Korea from its list of state sponsors of terrorism, granting the communist state a long-sought prize in exchange for wider scrutiny of its nuclear-weapons program.

North Korea agreed inspectors could examine facilities it has revealed as well as other locations suspected of being used for any part of its nuclear program. It also agreed to immediately resume disabling its Yongbyon reactor, a source of weapons-grade plutonium, U.S. envoy Sung Kim told reporters in Washington today.

The agreement breaks a two-month deadlock in six-nation talks aimed at ultimately ridding North Korea of atomic weapons and its ability to export nuclear technology. The U.S. had refused to remove North Korea from the list of state sponsors of terrorism until the government in Pyongyang agreed to a credible nuclear-inspection plan.

``Every element of verification that we sought is included in this package,'' said State Department spokesman Sean McCormack. ``Every single thing we sought going in is part of this package.''

The agreement resulted from a visit by U.S. negotiators to Pyongyang Oct. 1-3, officials said. Secretary of State Condoleezza Rice signed a declaration this morning immediately taking North Korea off the terror list after President George W. Bush made the decision to proceed last night, McCormack said.

Japan's Objections

The U.S. notified the other four nations involved in the talks -- South Korea, Japan, China and Russia -- of the agreement with North Korea, McCormack said. China plans to organize a meeting of the six countries as early as this month to complete and adopt a full verification protocol, Kim said.

Japan's Finance Minister, Shoichi Nakagawa, criticized the U.S. decision to remove North Korea from the list. Japan urged the U.S. as recently as yesterday to maintain the designation, citing North Korea's failure to move forward in an investigation of its abduction of Japanese nationals in the 1970s and 1980s.

``It's very regrettable,'' Nakagawa told reporters in Washington, where he is attending a meeting of the Group of Seven finance officials. ``Setting aside the nuclear proliferation problem, the abductees issue is a matter of terrorism.''

Airliner Bombing

North Korea landed on the U.S. terrorism list 20 years ago after its agents were implicated in the 1987 bombing of a South Korean airliner that killed all 155 people on board. The designation resulted in sanctions, including curbs on aid and a ban on sales of weapons. The State Department says North Korea isn't known to have committed an act of terrorism since then.

The administration has been trying to salvage the six- party talks that stalled in mid-August when Bush delayed a plan announced in June to remove North Korea from the terrorism list. He said the government in Pyongyang hadn't agreed to a credible verification plan.

Kim Jong Il's regime then began reversing steps it had taken since last November to disable its Yongbyon nuclear reactor. North Korea tested its first nuclear weapon in October 2006.

The agreement announced today appears to be a compromise on timing, said Stephen Bosworth, a former U.S. ambassador to South Korea. The North Koreans apparently felt the U.S. had reneged on the delisting by requiring a verification protocol first, he said.

Plutonium for Weapons

``It doesn't resolve some of the big questions, but it does mean North Korea is not going to be able to produce any further plutonium'' for weapons, said Bosworth, dean of the Fletcher School international affairs graduate program at Tufts University in Medford, Massachusetts.

The agreement allows for verification measures such as on- site inspections, forensic analysis of materials and equipment, access to documents and interviews of North Korean personnel, said Patricia McNerney, acting assistant secretary of state for international security and non-proliferation.

Such measures would apply to the plutonium program as well as suspected uranium enrichment work and exports of nuclear technology, officials said. North Korea submitted a declaration in June outlining its plutonium program, prompting Bush to tentatively announce the delisting.

Serious Challenge

U.S. officials cautioned that the agreement announced today doesn't guarantee steady progress toward full inspection of nuclear facilities in North Korea, particularly those that the government in Pyongyang hasn't declared.

``Verifying North Korea's nuclear declaration will be a serious challenge,'' McNerney said. ``This is the most secret and opaque regime in the entire world.''

The time verification will take depends on North Korea's cooperation, said Paula DeSutter, the assistant secretary for verification, compliance and implementation of arms accords. Visits to undeclared sites would occur with North Korea's consent, a standard procedure, she said.

``The big achievement is that they have now agreed to everything that we wanted,'' DeSutter said.

The United Nations' International Atomic Energy Agency will have ``an important consultative and support role in verification,'' the State Department said. North Korea this week barred the agency's inspectors from the entire Yongbyon complex.

U.S. specialists remain at the facility, and IAEA inspectors also will stay on the ground, McNerney said.

IAEA Inspectors

IAEA inspectors ``do not have their standard role under this agreement'' because specialists from the other five nations will conduct the work, McNerney said.

Florida Representative Ileana Ros-Lehtinen, the top Republican on the House Foreign Affairs Committee, said rescinding the designation of North Korea as a sponsor of terrorism means ``the administration has given up a critical instrument of leverage'' over the communist regime.

North Korea had provided ``crucial assistance to Syria's illicit nuclear program,'' even after assuring the U.S. and other nations it had stopped such proliferation, Ros-Lehtinen said today in a statement.

The removal of North Korea reduces the list of state sponsors of terrorism to Cuba, Iran, Sudan and Syria. The Bush administration removed Libya from the list in 2006 after leader Colonel Muammar Qaddafi renounced terrorism and agreed to give up all nuclear, chemical and biological weapons.

To contact the reporters on this story: Viola Gienger in Washington at vgienger@bloomberg.net; James Rowley at jarowley@bloomberg.net

Last Updated: October 11, 2008 17:18 EDT