The ambitious scheme envisages an "Iron Silk Road" uniting the rail networks of South and North Korea and connecting them to Europe via the Trans-Siberian Railway.

But it faces huge political obstacles. Speaking to a South Korea-Russia conference during his one-day visit, Putin acknowledged the difficulties.

"I hope political problems will be solved at an early date, as South Korea, North Korea and Russia will reap great economic benefits when it's completed," Putin said.

He urged South Korean investors to come on board, saying the project could help the "establishment of peace and stability".

Russia took a first step in September, when it completed a 54-kilometre section of track from its southeast border town of Khasan to the North Korean port of Rajin.

Located in North Korea's far northeast, where its borders and those of Russia and China converge, Rajin offers a warm-water port for the nation's two giant neighbours. Putin's desire is to see the rail link extended through North Korea and all the way down to the southern South Korean port of Busan.

Media reports say Russia is looking for South Korea to take a 34 per cent share in the project, with Moscow holding 36 per cent and Pyongyang 30 per cent.

Steelmaker Posco, train operator Korail, and Hyundai Maritime have been suggested as possible members of a consortium to take on the South Korean share.

Professor Andrei Lankov, a Russian expert on North Korea who teaches at Seoul's Kookmin University, said: "The idea itself makes perfect sense from a trade and economic viewpoint.

"But this is clearly going to cost billions of dollars and what companies are going to risk that much investment with North Korea in the current climate?"