The statement came after U.S. Secretary of State Colin Powell said the United States was reviewing an offer by North Korea to give up its missiles and nuclear facilities in exchange for substantial U.S. economic benefits.
The North Koreans floated the proposal in talks with U.S. envoys in Beijing last week. A senior U.S. official said, during that meeting, that North Korea acknowledged for the first time it had nuclear weapons and was contemplating exporting or even using them, depending on U.S. actions.
However, Australia's Foreign Minister Alexander Downer said Tuesday that he believed North Korea had exaggerated the capability of its nuclear program to try to maximize its negotiating position.
He said Pyongyang's claim "doesn't reflect our assessment of reality or America's assessment of reality."
In Beijing, Chinese Foreign Ministry spokesman Liu Jianchao questioned the validity of U.S. assertions that North Korea claimed to have nuclear weapons. He said that as far as he knew Pyongyang "has not made such a statement."
He added that China, which also took part in the Beijing talks, supports "the denuclearization of the Korean Peninsula and also maintains the legitimate security concerns" of North Korea should be resolved.
North Korea has demanded a nonaggression treaty with the United States. Washington has ruled out such a move, but says some form of written security guarantee could be possible.
In the Beijing talks, the United States demanded that North Korea first scrap its nuclear programs before talks on possible economic and diplomatic benefits, said Pyongyang's official newspaper Minju Joson.
"It is quite obvious that as long as the U.S. maintains such stand, the two sides will only waste time no matter how frequently they negotiate and such talks will not be of any help to the settlement of the nuclear issue on the Korean Peninsula," it said.
"What is urgent for the peaceful settlement of the nuclear issue is for the U.S. to put into practice its will to make a switchover in its hostile policy toward the (North)," it said.
Striking a note contrary to earlier remarks by other U.S. officials, Powell called the Beijing meeting "quite useful" and said U.S. officials are comparing notes with South Korea, Japan, China, Russia, Australia and others.
The North Koreans "did put forward a plan that would ultimately deal with their nuclear capability and their missile activities. But they, of course, expect something considerable in return," Powell said Monday.
State Department spokesman Richard Boucher, asked in a briefing Monday if the North Korean demands included recognition by the United States and economic help, indicated those were on a list of requests by the North Koreans.
President Bush has indicated that if North Korea dismantles its nuclear weapons programs, the United States would be willing to assist it with food and energy needs.
Boucher said it was a mistake to focus on the belligerent aspects of North Korea's presentation in Beijing because they represent only part of a much larger whole.
It is in this context that the administration will review last week's talks and decide on next steps, Boucher said.
In Pyongyang, South Korean and North Korean negotiators huddled for a third and last day of Cabinet-level talks to determine the wording of a joint statement they hoped to release later Tuesday.
South Korea demanded that the joint statement deal with concern over North Korea's nuclear programs.
But the North insisted that the South should not meddle in the nuclear standoff, calling it a dispute between itself and Washington, according to South Korean pool reports from the North Korean capital.
During the Beijing talks, U.S. officials said North Korea claimed it had reprocessed 8,000 spent nuclear fuel rods — a key step in producing nuclear weapons that could yield several more bombs within months.
But Powell said there still wasn't any evidence that North Korea had actually done so.
"Our intelligence community still cannot give us any validation or confirmation of what North Korea has said at various times and at various places with respect to reprocessing," Powell said.
Washington has said it wants the "verifiable and irreversible" elimination of the North's nuclear weapons programs.
Last week's talks in Beijing were the first high-level U.S.-North Korean contact since nuclear tensions spiked in October, when Washington accused Pyongyang of having a secret nuclear program in violation of a 1994 pact.