North Korea has pulled out of a regional security forum next week, ending hopes that it would join in discussions about nuclear-weapons. Meanwhile, South Korea is planning to increase defense spending to counter threats from the North.

North Korea's foreign minister had been expected at next week's ASEAN Regional Forum in Phnom Penh. But Cambodia said Pyongyang is pulling out of the meeting.

Cambodia expressed disappointment, saying it had hoped the summit would be an opportunity to defuse tensions on the Korean Peninsula.

The leaders of the Association of Southeast Asian Nations, Secretary of State Colin Powell, and top officials from China, Japan and South Korea will attend the annual gathering, called ARF.

It would have been one of the few large multi-lateral gatherings North Korea has attended since the revelation last October that it was seeking to build nuclear weapons. The weapons program violates several international accords.

The U.S. ambassador to South Korea, Thomas Hubbard, said he hopes there will be a future opportunity for multilateral talks with North Korea. He ruled out, however, any one on one discussions with Pyongyang.

"We are ready for multilateral dialogue as soon as the North Koreans are," he said.

Ambassador Hubbard added that if Pyongyang increases its threats against South Korea and other neighbors then the United States would "naturally consider further steps."

Other officials have indicated such steps could include economic sanctions, which North Korea says would be tantamount to a declaration of war.

Pyongyang says it needs nuclear weapons for defense, and insists it will only give theid up in return for a security pact with the United States and increased foreign aid. It also wants to discuss the issue only with the United States.

But Washington says Pyongyang must comply with its international obligations to be nuclear-free before other issues can be discussed. The United States also says other countries must be involved in talks.

Meanwhile, South Korea said it will increase military spending next year by more than 28 percent, primarily to counter the threat from the North.

For several years, South Korea has tried to engage the North, hoping aid and development projects would draw it into the world community and strengthen its dismal economy. In the past few months Seoul has gradually toughened its stance, although it insists the nuclear dispute must be resolved peacefully.

There has been one small sign of progress in relations between North and South Korea.

Military officials from the two countries crossed the Demilitarized Zone for the first time in 50 years to inspect work on a cross-border railroad. South Korea's defense ministry said 10 people from each country, led by a colonel, walked to the opposite side of the border area.