(Adds details, quotes, background)

By Arshad Mohammed

WASHINGTON, Jan 22 (Reuters) - North Korea appears to have met the legal criteria to be removed from the U.S. state sponsors of terrorism list although this also depends on its progress on denuclearization, a U.S. official said on Tuesday.

"It appears that North Korea has complied with those criteria," Dell Dailey, the State Department's coordinator for counterterrorism, told a group of reporters.

The comment appeared to be the most explicit to date by a U.S. official signaling that North Korea had satisfied the letter of the law on being dropped from the list, which imposes a series of sanctions on the secretive, communist state.

However, U.S. officials have said whether it is ultimately taken off the list also depends on North Korea making headway on a broader multilateral agreement under which Pyongyang agreed to abandon its nuclear weapons and programs.

North Korea missed a Dec. 31 deadline to produce a complete declaration of its nuclear programs, putting on hold any plans to relieve it of the sanctions under the terrorism list and the U.S. Trading with the Enemy Act, U.S. officials have said.

The Bush administration is trying to find a way to persuade Pyongyang to carry through on the declaration, hoping to make progress toward Washington's ultimate goal of dismantling the North Korean nuclear capability.

North Korea carried out a nuclear test in October 2006, upsetting U.S. allies such as South Korea and Japan which could both be targets of such a weapon.

Dailey said resolving the matter of Japanese citizens abducted by North Korea during the 1970s and 1980s did not appear to be an obstacle to taking Pyongyang off the terrorism blacklist. Japan has sought a full accounting of their fate.

"We think that even with that on the table that they still comply with the ... delisting criteria," he said.

His comment could irk Japanese officials because it departed from the typical U.S. government stance of careful ambiguity about whether removing North Korea from the terrorism list is directly tied to its resolving the abductee issue.

The fate of Japanese citizens abducted by North Korea is a highly emotive issue in Japan. Pyongyang admitted in 2002 that its agents had kidnapped 13 Japanese, five of whom have since been repatriated after living for years in North Korea.

North Korea says the other eight are dead, but Tokyo wants better information about their fate, as well as information on four other people it says were also kidnapped.

A congressional aide who asked not to be named said the U.S. government has been seeking to use the terrorism listing to put pressure on North Korea to produce its declaration and to take steps to satisfy Japan on the abductee issue.

"We are using this as leverage," said the aide, who asked not to be named because of the sensitivity of the matter. "If push came to shove, it (North Korea) could be delisted tomorrow." (Editing by Mohammad Zargham)

AlertNet news is provided by