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By Kang Shinhye

SEOUL, Aug 24 (Reuters) - South Korea said on Friday it would end its effective ban on U.S. beef imports, once worth about $850 million annually, which should ease tensions in a trade dispute.

South Korea, which was the third-largest overseas market for U.S. beef, effectively blocked U.S. imports in early August by suspending quarantine inspections after finding a prohibited spinal column in a beef shipment.

The decision to resume imports came after South Korea received assurances from the United States on safety inspections.

"We have decided to resume quarantine inspections as of Aug. 27 as Washington ensured the safety of beef and promised to tighten its export procedures," Lee Sang-kil, head of the agriculture ministry's livestock bureau, told reporters on Friday.

A total of 6,800 tonnes of beef sitting in South Korea's warehouses will reach store shelves again after an inspection, the ministry said.

Seoul, however, will block imports from the plant owned by Cargill [CARG.UL] that shipped the spinal material and will keep a ban on four other packers which shipped parts deemed by Seoul as risky, the ministry said.

"South Korea will keep accepting beef imports from the other 30 U.S. beef processing plants authorised by the country," Lee said.

U.S. beef returned to South Korean stores shelves in July, when South Korea ended a 3-1/2-year ban last month on U.S. beef by allowing boneless U.S. beef from cattle under 30 months old.

The ban had been imposed after a 2003 outbreak of mad cow disease in the United States.

The country also said it would resume a review on the safety of U.S. bone-in beef, which had been suspended after it found the spinal column in a shipment.

Seoul had expected to open the market wider to include U.S. beef on the bone by September.

"We will restart the review, but we are not sure when bone-in beef will enter the South Korean market," Lee added.

The United States asked South Korea to fully open its market to U.S. beef after the World Organisation for Animal Health (OIE) in May gave the United States a "controlled risk" status for beef safety.

Beef with ribs, used in a popular Korean dish, made up a hefty portion of the 199,000 tonnes of U.S. meat imported into South Korea in 2003.

South Korea's ban on U.S. beef also has been one of the thorniest economic issues between Seoul and Washington.

U.S. lawmakers have said they may not approve a sweeping bilateral trade deal struck in April, the biggest for Washington in about 15 years, if Seoul does not completely open its market to U.S. beef.

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