North Korea says it needs to improve ties with South Korea and the United States next year, stressing the need to establish a peace system through dialogue.

In a New Year's message Friday, the North said the fundamental task for ensuring peace and stability on the Korean Peninsula and in Asia is to end the hostile relationship between Pyongyang and Washington.

The North added a peace system is needed on the peninsula to make it nuclear-free through dialogue and negotiations.

In addition, the North said 2010 is the tenth anniversary of the June 15 inter-Korean joint declaration, and urged the two Koreas to improve cross-border ties based on the spirit of the declaration.

Pyongyang also reiterated its efforts to become a strong and prosperous nation by 2012.

The North's New Year's message this time is considered more flexible and practical unlike in those in previous years, which blasted the South Korean government.