TOKYO - In a bold challenge to the United States, North Korea said yesterday that it was immediately lifting a freeze on a nuclear reactor that has been mothballed since a 1994 crisis that nearly led to war between the two countries.

Pyongyang justified the surprise decision, which is the latest in a sharply downward spiral in relations with Washington, by invoking a recent U.S. suspension of fuel oil deliveries to North Korea. The fuel cutoff was announced as punishment for a secret nuclear weapons program, whose existence U.S. diplomats say North Korea acknowledged in early October.

Using the acronym for the country's official name, the Democratic People's Republic of Korea, the Foreign Ministry said in a statement: "The prevailing situation compelled the DPRK government to lift its nuclear freeze adopted on the premise that 500,000 tons of heavy oil would be annually supplied to the DPRK under the DPRK-U.S. Agreed Framework and immediately resume the operation and construction of its nuclear facilities to generate electricity."

The statement, which was published by the official Korean Central News Agency, added: "Whether the DPRK refreezes its nuclear facilities or not hinges upon the U.S."

In Washington, White House spokesman Ari Fleischer said the North Korean decision was "regrettable," adding that the United States would work with its allies to resolve the matter peacefully. He said the United States "will not bargain or offer inducements for North Korea to live up to the agreements North Korea has signed."

The North Korean announcement followed the seizure and release this week of a ship carrying North Korean Scud missiles to Yemen. North Korea's missile customers have also included Libya, Iran, Syria, Pakistan and Egypt.

Early today, North Korea attacked the ship's seizure as "an unpardonable piracy that wantonly encroached upon the sovereignty" of the Democratic People's Republic of Korea, the Associated Press reported.

It wasn't clear whether the interception influenced the decision to lift the freeze on its nuclear reactor, but an editorial in the North's official newspaper, Rodong Sinmun, said: "It is necessary to heighten vigilance against the U.S. strategy for world supremacy and 'anti- terrorism war.'"

The brief report said the United States was forced to release the ship after realizing that it had no legal grounds to seize it "in broad daylight" and "in the open seas."

Yesterday's North Korean announcement prompted an emergency meeting of the South Korean Cabinet.

A statement read by Foreign Ministry spokesman Sok Dong Yon urged North Korea to "observe all the obligations stipulated in the 1994 Geneva Accord, Inter-Korean Denuclearization Declaration, Nonproliferation Treaty and International Atomic Energy Agency safeguards."

South Korea is one week from presidential elections in which the two major candidates have offered sharply different visions of relations with their neighbor. Throughout the campaign, there have also been large anti-American demonstrations, with many protesters condemning the presence of 37,000 U.S. troops in the country and denouncing U.S. policy toward North Korea.

One candidate, Roh Moo Hyun, offers continuing aid and other reconciliation efforts; the other, Lee Hoi Chang, is largely in line with the Bush administration, warning of sanctions if North Korea does not drastically modify its behavior.

Roh, who according to the latest opinion polls is the narrow front-runner, has the most to lose from a sudden heightening of tensions, and he issued a carefully hedged statement saying "the world is alarmed by North Korea's announced plan to resume the operation of nuclear facilities and its threat to develop nuclear weapons." But he urged dialogue and called on the United States "to cooperate, so that this problem can be resolved peacefully without further building tension on the Korean peninsula."

Plutonium from the reactor in question, at Yongbyon, 60 miles north of Pyongyang, is being kept in a cooling pond under surveillance by inspectors of the International Atomic Energy Agency.

Expulsion of the inspectors, or removal of the fuel, which is ideal for use in nuclear weapons construction, would represent a sharp escalation of the confrontation with Washington, but analysts said last night that the wording of the North Korean statement suggested that those are steps that it has not yet resolved to take.

Instead, North Korea leavened its defiance with an apparent call for a negotiated solution. "It is the invariable stand of the DPRK government to find a peaceful solution to the nuclear issue on the Korean peninsula," its statement said.

In other statements, North Korea has said that it would be willing to discuss all of its weapons of mass destruction with the United States if it were to be offered the normalization of relations and a guarantee that the country will not be attacked.

Pyongyang has been seriously rattled by its inclusion by President Bush in a supposed "axis of evil" and seems to believe that it will be next on a hit list. "The U.S. has already listed the DPRK as part of an 'axis of evil' and a target of pre-emptive nuclear attack," yesterday's statement from North Korea said.

While expressing strong dismay over the announcement, Japanese officials played down the immediate threat posed by the North Korean statement and said that it appeared to be aimed at bringing the United States to the negotiating table.

"If you read the North Korean announcement carefully, their consistent stance is to seek a peaceful resolution," Prime Minister Junichiro Koizumi told reporters.