South Korea said Tuesday it will provide North Korea with humanitarian aid worth 3 billion won (US$2.9 million), apparently a conciliatory gesture amid confusing signals from the unpredictable communist neighbor.

Seoul will use government funds to finance civilian groups' projects to offer assistance to North Korea in the agricultural, livestock and health-care sectors, said the unification ministry.

It would mark the first time that the South spends money from state coffers to support such nongovernmental organizations (NGOs) since imposing tough sanctions on the North shortly after its deadly attack on a South Korean warship in 2010.

Known as the "May 24th Measure," the sanctions ban all trade and investment with the North except for the Kaesong industrial complex. The South Korean government has also allowed humanitarian assistance by NGOs.

"In accordance with the policy of providing humanitarian aid that is substantially helpful to North Korean people, the government has decided to use the South-North Cooperation Fund to finance North Korea aid projects by civilian organizations," a ministry official told reporters. The ministry handles inter-Korean ties.

Under the plan, 1 billion won will be allocated for building plastic greenhouses, one billion won for constructing pediatric clinics, and the rest for the dairy industry, added the official.

Some observers here say it may herald a move toward the lifting of the May 24th Measure.

But ministry officials said the aid plan, which is aimed at improving the livelihoods of North Korean people, can be implemented within the framework of the May 24th Measure.

The government's assistance will be limited to some humanitarian aid, they pointed out.

Seoul's latest initiative, meanwhile, coincides with the launch of a presidential panel to prepare for the reunification of the peninsula.

The North's Kim Jong-un regime recently sent mixed signals on its approach toward the South. It repeatedly test-launched missiles and artillery shells into nearby waters.

Pyongyang also announced a decision to send a delegation to the Asian Games to open in Incheon, just west of Seoul, in September. (Yonhap)