The Times, quoting two sources familiar with the decision, reported the new Japanese prime minister did not accept the offer despite U.S. urging.

The issue relates to U.S. efforts to reach an understanding with the Communist country for its denuclearization. The issue, part of the six-nation talks, has bogged down over U.S. demand for verification in return for removing Pyongyang from its list of state sponsors of terror.

The Times report said the new verification offer from North Korea was reached with chief U.S. negotiator Christopher Hill last week.

The report said the United States decided to accept that offer if it was similarly accepted by other nations in the talks which include Japan, China, Russia and South Korea.

It quoted a Japanese source that the reason for Japan's rejection was that the offer "seems bad." The rejection has led the United States to seek more concessions from North Korea, the report said.

In recent weeks, North Korea had expelled inspectors with the U.N. atomic watchdog from its main Yongbyon nuclear complex, which was disabled earlier.

The Times report said U.S. intelligence has noticed activities which may indicate North Korea may be preparing for a nuclear test.