South Korea said Wednesday it has failed to reach agreement with Pyongyang on terms for talks on a dispute over a shuttered tourist resort in North Korea.

Pyongyang agreed conditionally on Tuesday to attend a meeting this week, raising hopes for a breakthrough after amiable talks between the two Koreas in Indonesia last week. But South Korean Unification Ministry officials said Wednesday they cannot accept the North's terms and are preparing a counter-offer.

The South had proposed a third round of working level talks between government officials to be held Friday at Mount Kumgang, a lush resort developed by South Korean companies. Twice previously, the South sent groups of government officials and businessmen to the resort but was unable to hold substantive talks.

In its response Tuesday, North Korea said there is no point in having a meeting unless business executives accompany government officials to the resort.

South Korean tourists have been barred from visiting the resort since 2008, when a North Korean guard fatally shot a female visitor who wandered into a restricted military area. The countries have been unable to agree on measures to prevent a recurrence.

North Korea, which valued the resort as a source of precious hard currency, now is threatening to confiscate the South Korean assets — which include hotels, restaurants and a golf course. It is believed to be seeking investors from a third country to take over the resort.