By Caren Bohan

SYDNEY, Sept 7 (Reuters) - President George W. Bush said on Friday the United States would be willing to consider a peace treaty with North Korea if it gave up its nuclear weapons programme.

Bush discussed the treaty possibility in a meeting with South Korean President Roh Moo-hyun on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum in Sydney.

Bush said he would offer a new "security arrangement" for the Korean peninsula if North Korea's leader Kim Jong-il followed through with promises to dismantle its nuclear weapons programme.

Prodded by Roh during a photo opportunity to be "a little clearer", Bush said this meant a permanent agreement to replace the fraying truce that ended the 1950-53 Korean War.

The truce has left the two Koreas, divided by a heavily militarised frontier, technically at war.

"We're looking forward to the day when we can end the Korean War. That will happen when Kim Jong-il verifiably dismantles his weapons programme," Bush told reporters during the picture-taking session at the end of his meeting with Roh.

With a summit between Roh and Kim due in September, Bush asked the South Korean leader to urge his North Korean counterpart "to adhere to the agreement that he made with us".

While the United States and South Korea are close allies, Bush and Roh have not always enjoyed an easy rapport. The Bush administration has often been frustrated by Roh unwillingness to follow Washington's tough line on North Korea.

After news reports of apparent tension during the photo opportunity, the White House moved quickly to try and dispel such an impression, blaming the awkwardness on translation.

"There was clearly something lost in translation during the photo op," said White House spokesman Gordon Johndroe.

"President Bush considered it a good meeting and both the U.S. and Republic of Korea are on the same page with regards to the need for Korea to comply with its obligations under the six party talk agreement," he said.

North Korea agreed two years ago in "six-party" negotiations with the United States, South Korea, Japan, China and Russia to abandon its nuclear programme in return for economic and diplomatic benefits.

But in October 2006 it tested a nuclear explosive for the first time. A fresh six-party agreement last February saw North Korea shut its Yongbyon complex, which produced bomb-grade plutonium.

North Korea has agreed to fully account for and disable its nuclear programme by the end of this year.

Bush said he was "optimistic" about progress to get North Korea to give up its weapons, but said there was still more work to be done. He insisted the dismantling must be verifiable.

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