BT is seeking approval from the South Korean Information and Communications Ministry, and a deal could be struck as early as October. There are also said to be a number of competing bids for the stake.
The move will mark a significant inroad into the South East Asian market for BT, which will join other British firms in snapping up investment opportunities in the crisis-ridden region as companies there hit rock bottom prices.
LG Telecom is a mobile phone company consortium, which is led by the industrial conglomerate LG Electronics and was set up in 1996.
"Clearly Asia is an important market to us. South Korea would be an eminently sensible place for us to invest in," said a spokesman for BT.
Thus far, BT's main investments in the region have been in Japan, where the British company has a number of a joint ventures and partnerships. The largest of these is BT-NIS, a joint venture with Japanese firm Marubeni to supply telecoms services tailor-made for multinationals.
In July, BT announced a pounds 6bn link-up with the US telephone giant AT&T under which the two companies will put all their international operations into a separate entity. The 50-50 joint-owned company will have operations in 237 countries with sales of up to pounds 7bn.
The move, currently awaiting approval from competition authorities, follows the collapse last year of BT's planned merger with MCI after upstart WorldCom snatched MCI from under BT's nose.
However, the failed merger has given BT some unexpected cash to play with. Worldcom is due to pay BT pounds 7.5bn for the stake it had in MCI prior to the US company's purchase by Worldcom.
Elsewhere, BT has been making big strides into Europe with investments of around pounds 1bn so far via a myriad of joint ventures with local phone companies. These include the purchase of a 26 per cent stake in the French mobile phone company Cegetel and a link-up with the German industrial group Viag.
In another sign that British companies are now moving back into Asia despite the continuing economic crisis, Blue Circle, the building materials group, announced last week it was buying two cement companies in Malaysia and Singapore for pounds 177m from Malayan United Industries, the company that recently bought clothes retailer Laura Ashley.