North and South Korea agreed Wednesday to hold a reunion later this month for families separated by the 1950-53 Korean War -- the first such event for more than three years.

Officials from both sides meeting in the border truce village of Panmunjom, decided the reunion would be held February 20-25 at the North's Mount Kumgang resort, the South's Unification Ministry said.

The agreement marks a small sign of progress between the two rivals who, in recent years, have struggled to cooperate on even the most basic trust-building measures.

However, both sides have been here before.

The two Koreas had agreed to hold a reunion last September but, even as the chosen relatives prepared to make their way to Mount Kumgang, Pyongyang cancelled the event just four days before its scheduled start, citing "hostility" from the South.

And there are widespread concerns that the families could end up being disappointed again this time around.

South Korea is due to begin joint military exercises with the United States at the end of February, and North Korea has warned of dire consequences should they go ahead.

The annual drills are always a diplomatic flashpoint on the Korean peninsula, and last year resulted in an unusually extended period of heightened military tensions.

Yoo Ho-Yeol, professor of North Korean Studies at Seoul's Korea University, predicted that the North would use the reunion as a bargaining chip.

"Rather than cancelling the event again, it may try to extract concessions, like a scaling down of the joint military exercises, or an easing of South Korean sanctions," Yoo said.

Millions of Koreans were separated by the war, and the vast majority have since died without having any communication at all with surviving relatives.

Because the Korean conflict concluded with an armistice rather than a peace treaty, the two Koreas technically remain at war and direct exchanges of letters or telephone calls are prohibited.

Up to 73,000 South Koreans are wait-listed for a chance to take part in one of the reunion events, which select only a few hundred participants at a time.

The reunion programme began in earnest in 2000 following an historic inter-Korean summit. Sporadic events since then have seen around 17,000 relatives briefly reunited.

But the programme was suspended in 2010 following the North's shelling of a South Korean border island.

North Korea wants the South to resume regular tours to Mount Kumgang, which had provided a much-needed source of hard currency in the past.

South Korea suspended the tours after a woman tourist was shot dead by North Korean security guards in 2008, and it has repeatedly rejected the North's efforts to link their resumption to the family reunion issue.

Pyongyang is also pushing for a resumption of six-party talks on its nuclear programme -- a long-stalled process involving the two Koreas, China, Japan, Russia and the United States.

Seoul and Washington insist substantive dialogue can only begin after Pyongyang demonstrates a tangible commitment to abandoning its nuclear weapons programme.

Since the beginning of the year, North Korea has been on something of a charm offensive, making a series of conciliatory gestures that critics have largely dismissed as a calculated bid to assume the moral high ground ahead of the South-US military exercises.

Past North-South family reunions have been hugely emotional -- almost traumatic -- affairs, with many of the elderly participants breaking down and sobbing as they cling to each other.

The events typically last several days and the joy of the reunion is tempered by the pain of the inevitable -- and this time permanent -- separation at the end.