According to Yonhap news agency, North Korea had issued a notification to South Korea's Ministry of Unification that it had accepted the offer to hold talks on next Tuesday at a truce village called Panmunjom, located just across the Demilitarised Zone (DMZ).
Baik Tae-hyun, the spokesperson for the unification ministry, said: "The main agenda items will include how to improve the two Koreas' relations including (the North's participation in) the Winter Games".
He also said that the two sides will discuss details, including the composition of delegates by exchanging documents for the upcoming talks.
This decision was taken following North Korean leader Kim Jong-un's re-conciliatory New Year message in a televised address to the nation. He also warned the U.S., saying that 'the nuclear button' is always on his 'desk'.
However, South Korea and the U.S. said that the exercises were defensive in nature.
South Korean President Moon Jae-in will hope that the next week's bilateral talks with their arch-rivals could pave way for the de-nuclearisation and peace across the Korean peninsula and broader coordination between the U.S. and South Korea.
During a phone conversation yesterday with the U.S. President Donald Trump, Moon told the latter to continue pressurising North Korea over persistent missile tests and agreed to 'not to repeat mistakes of the past.'
"There is no change in the government's stance that along with efforts to restore inter-Korean ties. Seoul will consistently push for North Korea's denuclearization together with the international community", Baik said.
China on Wednesday welcomed the talks between the two Koreas and has appreciated their effort to use the 2018 Winter Olympics as a platform for improving ties.
The Winter Olympics is scheduled to take place at South Korea's Pyeongchang from February 9-25.
The upcoming high-level talks come amid the increasing tension between the two countries as South Korea seized a Hong Kong-flagged oil tanker returning after allegedly transferring oil to North Korea a few days ago.