During a meeting at the presidential Blue House, Mr Kim told opposition leaders that the National Assembly would be allowed to rewrite the laws, which postpone the right of workers to form free trade unions, and make it easier for companies to lay them off.
Also subject to revision will be amendments to the national security law giving new powers to the Korean intelligence agency.
The President promised that trade union leaders, who are wanted by police for organising the strikes, will not be seized from their sanctuary in Seoul's Roman Catholic cathedral.
Kim Dae Jung, head of the chief opposition party, the National Council for New Politics, said: "Today's meeting was not a total solution but there was some advance. President Kim Young Sam showed an attitude of wanting to solve the problems together with opposition parties."
The announcement represents an unexpected U-turn for the government, which appeared to have been gaining the upper hand in the month-long dispute.
After a patchy response to a general strike call last week, the leaders of the Korean Confederation of Trade Unions (KCTU) announced last Saturday that they would limit their action to one day a week, with an all-out strike planned for next month if the government fails to give in to their demands.
But in the face of dismal popularity ratings, intensifying international pressure and mounting damage to industry, Mr Kim appears to have decided to cut his losses.
The President's about-turn occurred on the eve of a meeting in Paris today of the Organisation for Economic Co-operation and Development (OECD), a grouping of rich nations which South Korea joined last December. The OECD requires entrants to recognise the right of workers to form trade unions, and yesterday's announcement will take the edge off growing criticism among other member governments.
But the battle is by no means over; both the KCTU and the officially sanctioned Federation of Korean Trade Unions (FKTU) were dismissive of yesterday's announcement and promised to keep pressure up until the labour law is completely withdrawn.
"We are very disappointed," the KCTU secretary-general Kwon Young Kil said. "The talks today have not solved any of the basic problems, and are far from what the Korean people demanded."
A spokesman for the smaller opposition party, the United Liberal Democrats, predicted "a complete breakdown" in discussions on the dispute. "The President showed that there is a huge gulf between us in the way he interprets the current situation, and he was not sincere at all," Ahn Taek Soo said.
The strikes are already estimated to have cost more than $3bn (pounds 1.8bn) in lost production, and resolving them will not become any easier for the government over the next few weeks.
When the university term begins again next month, there are likely to be new protests from Korea's highly active student population against the new national security law, which was drafted in response to left-wing protests on campuses last summer.
Next March, union discontent will find a new focus in the annual round of spring wage negotiations. President Kim's single five-year term expires at the end of this year, and the competition is already gathering among members of his party to succeed him after elections next December.Reuse content