We are no longer part of the 'Axis of Evil', says North Korea

On the day the US and North Korea sealed a landmark deal at six-party talks on a "grand bargain" intended to lead to the dismantling of Pyongyang's nuclear programme, the chief American negotiator was asked whether North Korea was being removed from President Bush's "Axis of Evil".

The envoy, Christopher Hill, replied: "I'm just a simple diplomat. I'm just trying to deal with a problem here." But yesterday, following talks in Geneva stemming from the 13 February disarmament deal, North Korea claimed such a momentous decision had indeed been taken at the talks over the weekend between a North Korean delegation and a team led by Mr Hill.

In a statement, the North Korean government announced that Washington had decided to remove the isolated hardline Communist state from its list of states accused of sponsoring terror, and lift sanctions against Pyongyang.

If confirmed, the move would signal further significant progress in carrying out the terms of the 13 February agreement that provides for North Korea to shut down its nuclear programmes in exchange for diplomatic recognition, oil and other aid. Mr Hill said on Sunday that the North Koreans had, for the first time, set a timetable for declaring and shutting down its nuclear programme.

He added that both sides had held a "full discussion" on the issue of removing North Korea from the terror list, where it has been since 1988 after the sabotage of a South Korean airliner that exploded in mid-air, killing 115 people.

Washington has refused to remove North Korea from the blacklist over Pyongyang's continued refusal to hand over Japanese Red Army militants who hijacked a Japan Airlines jet during an internal South Korean flight in 1970, and were granted political asylum by the North.

If North Korea were to be dropped from the list, it would enable the impoverished state to have access to low-interest loans from international lending organisations such as the World Bank and the International Monetary Fund.

The de-listing has been a "major part of the discussions", said Britain's former envoy to Pyongyang, Jim Hoare. "The North Koreans want it as much as they do the fuel oil," which is being supplied to North Korea under the agreement.

Any de-listing could lead to the full opening of relations between the US and North Korea – and a possible visit by the US Secretary of State Condoleezza Rice, and would lead to a positive atmosphere before the next round of nuclear talks.

Countries on the list

* IRAN (Since 19 January 1984): Linked to Islamic militant groups including Hizbollah in Lebanon

* CUBA (Since 1 March, 1982): Actively opposes US-led war on terrorism

* NORTH KOREA (Since 20 January, 1988): Put on list after sabotage bombing of a South Korean airliner that killed 115 people

* SUDAN (Since 12 August, 1993): Hosted al-Qa'ida leader Osama bin Laden in the 1990s.

* SYRIA (Since 29 December, 1979): Provides support to Hizbollah and Palestinian militants