South Korean lawmakers have agreed to spare the ministry responsible for relations with North Korea and reject a call for its closure made by the president-elect, local media reported on Saturday.

President-elect Lee Myung-bak, who takes office on February 25, wanted to get rid of the Unification Ministry, saying it had drifted too far off its original course, and transfer most its functions to the foreign ministry.

"We have come up with a compromise for the Unification Ministry," Ahn Sang-soo, a senior member with Lee's conservative Grand National Party (GNP), told Yonhap news agency.

The compromise allows the Unification Ministry to stay while lawmakers try to strike a deal to shut other ministries in a plan backed by Lee to streamline government, local media reported lawmakers as saying.

Liberal forces who oppose closing the Unification Ministry have a majority in parliament and the GNP needs their support to pass Lee's legislation on reforming government.

Party officials were not immediately available for comment.

Critics say Lee's proposal to close the ministry primarily responsible for relations with North Korea could send the wrong signal to Pyongyang, which has long accused Lee's conservative party of plotting to keep the peninsula divided.

The Unification Ministry has been at the centre of criticism that the outgoing government had been too soft on the impoverished North, pouring aid across the border despite internationally condemned missile and nuclear tests.

Lee, an ex-business chief executive, said he would review inter-Korea cooperation projects and make it harder for the North to receive aid by linking handouts to progress in the communist nation's nuclear disarmament.

Other ministries that would be closed, merged or downgraded under the Lee plan are maritime affairs, information, science and gender equality. The Finance Ministry will absorb the budget ministry.