The surprise one-day talks, the two sides' first in seven years arranged at brief notice and held at the border village of Panmunjom, came just days after the two sides agreed to reunite Korean families separated since the 1950-53 Korean War.
The six-day reunions set to start next Thursday at North Korea's scenic Mount Kumgang resort would come ahead of the annual South Korea-U.S. military drills which will start late this month and last through April.
However, the North had earlier threatened to back out of the reunion agreement if the South did not scrap the military exercises, which Pyongyang sees as a rehearsal for an attack against it despite Seoul's refusal to scrap them saying they are routine and defensive in nature.
At the high-level border talks, South Korea rejected the North's proposal to delay the military exercises, saying the family reunions should not be linked to them, South Korea's Yonhap News reported, quoting the official at the Unification Ministry, which handles inter-Korean issues.
The official said the South also stressed that family reunions would be a first step toward improving the strained inter-Korean relations.
"We proposed that South and North Korea build confidence by implementing the family reunions," the official said.
Yonhap said the latest developments once again raised doubt whether the reunions would take place. The North in the past has called off such reunions at the last minute. The issue is a highly emotional one as most of the separated family members are quite old and may not have long to live.
"Differences between the two Koreas have not been narrowed," the official said.
The official said the two sides agreed to continue discussing their issues, but set no date for the next round of talks.
Relations between the two countries plunged after North Korea's long-range missile firings and its third nuclear test conducted a year ago in violation of U.N. resolutions.