Officials from both North and South Korea have held their first formal talks in more than two years, with the feuding countries brought together by sport.

During a meeting in the village of Panmunjom, which sits on the border, the two nations discussed next month's Winter Olympics in the South Korean county of Pyeongchang.

In a breakthrough, North Korea has offered to send a delegation of high-ranking officials, athletes and a cheering squad to the event.

Meanwhile, South Korea proposed that athletes from both nations march together at the opening ceremony - bringing the prospect of improved ties after years of strained relations.

Seoul went on to suggest that military talks should take place with a view to reducing tensions on the Korean peninsula, and raised the prospect of resuming temporary reunions for families separated by war.

Citizens living in Pyongyang have said the talks are encouraging, which follow an olive branch invitation from North Korean leader Kim Jong Un in an unusual New Year address.

One of them, Kim Ri Ah, said: "Every Korean really wants relations between the North and South to improve, it's urgent, it's an important thing that the whole nation should solve by coming together.

"Anything that provokes either side or creates obstacles to reunification should completely stop."

The meeting comes at a time of heightening tensions that has seen the most aggressive rhetoric from both the North and the US in living memory.

Recently, US & North Korean leaders have openly compared the size and effectiveness of their nuclear "buttons" to the dismay and alarm of hundreds of millions.

North Korean Leader Kim Jong Un just stated that the “Nuclear Button is on his desk at all times.” Will someone from his depleted and food starved regime please inform him that I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!

— Donald J. Trump (@realDonaldTrump) January 3, 2018