SEOUL: South Korea said Tuesday it would allow more of its citizens to work in a jointly-run industrial estate in North Korea amid growing signs of a thaw in cross-border relations.

The Unification Ministry plans to let up to 900 South Koreans work at the Kaesong Industrial Complex, up from the current 600, spokeswoman Lee Jong-Joo told AFP.

"There have been many requests from South Korean companies (to allow more South Korean managers to stay in the complex)... the change will likely take place next week," Lee said.

Following a multinational investigation, the South accused the North in May of torpedoing a warship and killing 46 sailors, a charge it denied.

As cross-border tensions rose, Seoul slashed the number of its managers staying at Kaesong by half to 500 amid fears they could be held hostage.

Following mounting complaints from some South Korean factory owners at the complex, Seoul lifted the ceiling to 600.

Kaesong is the last inter-Korean reconciliation project still operating. About 44,000 North Koreans work for more than 120 South Korean companies producing goods such as textiles, footwear, watches and kitchenware.

The estate is considered a significant source of hard currency for the cash-strapped North, as its workers there earned 40 million dollars in wages in 2009.

Pyongyang, in an apparently conciliatory gesture after months of hostility, last week returned the crew of a South Korean boat accused of poaching on its fishing grounds.

It also accepted an offer of flood aid from Seoul and called for the restarting of a reunion programme for families separated since the 1950-1953 war on the peninsula.

The two sides will hold talks Friday about a possible resumption of the programme, which has been on hold for a year.

BDST: 1101 HRS, September 14, 2010