South Korea said Thursday it will seek to establish a "stable" dialogue channel with the Democratic People's Republic of Korea (DPRK).

South Korea's unification ministry, which oversees inter-Korean affairs, outlined its policy priorities in an annual report submitted to President Lee Myung-bak.

The report said the country will also set up a fund to prepare for eventual reunification with the DPRK and raise public awareness on the issue.

South Korea also pledged to take initiatives in inter-Korean affairs, while seeking cooperation with other regional players.

The annual report came as tension remains between the two Koreas following the death of top DPRK leader Kim Jong Il on December 17, 2011 which Lee said in his New Year speech is " portending a sea change in the developments" on the divided peninsula.

The president called for ending "mutual distrust through dialogue" and said the window of opportunity for mending inter- Korean ties "always remains open," indicating a shift from his previous hardline stance on Pyongyang.