North and South Korea reportedly moved closer to formal unification talks today as the north's representatives indicated a willingness to compromise on two key issues.

After a three-hour meeting here, the two countries' representatives appeared to be approaching an accommodation on the toughest preliminary steps -- where their prime ministers should meet and how their agenda should be arranged.

No agreement was reached, except to meet again on March 18. But when asked if the prime ministerial conference seemed to be closer as a result of today's talks, the South's spokesman, Lee Dong Bok, said, "I think you can say so."

Lee's version of the third round of working-level talks left the impression that the two bitter enemies are within two or three meetings of ironing out their final differences on procedural matters and that their respective prime ministers could begin formal negotiation in about two months.

The North appears especiallly eager to begin these talks and has made several concessions on procedural matters. Its spokesmen in Tokyo also have outlined positions on substantive steps toward unification that are similar to the gradual approach long favored by the South.

The cordial atmosphere that has characterized the preliminary discussion continued to be evident today with each country's three delegates displaying good humor as they sat down to talk in a conference room in this truce village along the Demilitarized Zone.

As in previous sessions, they joked and discussed the weather amicably as reporters from both Koreas and abroad watched and photographed them.

While they talked in private, the South Korean press entertained the visitors from North Korea, the Soviet Union and China with beer, wine and Korean delicacies.