North Korea is threatening to pull its delegation out of the Asian Games scheduled for later this year in South Korea after talks on the North's involvement broke down this week.
The state-run Korean Central News Agency said South Korean officials made a series of "absurd" demands at the talks, held Thursday at the border village of Panmunjom.
Specifically, KCNA said Seoul complained Pyongyang was sending too many athletes to the games. It also said South Korea was trying to limit the size of the North Korean flag to be displayed at the event.
South Korean officials on Friday denied making such demands, saying they were only trying to get more information on the exact size of the North Korean delegation.
The talks were expected to focus mainly on logistical issues for the North Korean delegation, although there reportedly has been some disagreement over who would pay for the North Koreans' trip.
South Korea has traditionally paid for expenses incurred by the North Korean delegation, although Seoul officials have said they would eventually like North Korea to cover its own team's expenses, in line with international standards.
Pyongyang previously announced plans to send 150 athletes and a squad of cheerleaders to the games that are to be held in late September and early October in the South Korean city of Incheon.
It would be the first time in nine years that North Korea has sent a cheerleading squad to a South Korean athletic event. The cheerleaders, who perform synchronized dance moves and wear traditional Korean dresses, have become very popular in the South.
North Korea says the delegation is meant to improve bilateral relations that have suffered amid a series of recent missile tests by the North.
Tensions regularly flare up between the two neighbors, which remain in a technical state of war following their 1950s conflict.