Kim Jong-nam tracked down to Macau hotel as elevation of Kim Jong-il's brother-in-law to No 2 spot in leadership is announced

He was once widely touted to succeed his father as leader of North Korea. But Kim Jong-nam reportedly fell out of favour in 2001 when he was caught trying to enter Japan on a fake Dominican Republic passport to visit Tokyo's Disney resort.

Today he was tracked down by a South Korean newspaper to a hotel in the Chinese territory of Macau. Unshaven, paunchy and wearing jeans and blue suede loafers, Kim, 39, dismissed reports he intended to seek asylum in Europe because he lost out in a power struggle with his brother, said the JoongAng Ilbo.

"I have no plans on moving to Europe. Why would I?" he said, while waiting for the lift. "I could go there for a vacation, but I think you have only heard rumours."

The remarks come as it was reported that his father, Kim Jong-il, had promoted a brother-in-law, Jang Song-thaek, to the No 2 spot, a position that could allow the latter to become the next ruler or kingmaker in deciding which son succeeds the Dear Leader.

Today's announcement was made after a rare parliamentary session reportedly attended by the reclusive leader, who is believed to have suffered a stroke two years ago. It was difficult to assess the 68-year-old's health because Pyongyang's state-run television broadcast only a long shot of him, sitting behind a desk in the middle of a long line of parliamentarians.

The parliament, or the Supreme People's Assembly, usually meets once a year to approve bills vetted by the ruling Workers' party. The body met in April, and no reason was given for holding the unusual second session.

The session came amid worsening economic woes, pressing succession issues and a campaign by Seoul for UN action against Pyongyang for an attack on a South Korean naval vessel in March that killed 46 sailors. North Korea denies sinking the ship, and its state-run media did not say whether parliament discussed the issue.

Lining up a successor to Kim has long been one of North Korea's most pressing issues and it continues to fuel speculation about the mysterious nuclear-armed nation. Analysts said a reshuffle was full of significant signs that the regime was making serious preparations for change.

The most important promotion involved Jang, who already had immense power as the head of intelligence and the political overlord of the prosecutor's office, the police and the courts.

Jang was promoted to vice-chairman of the all-powerful National Defence Commission, which decides security policy, said Yang Moo-jin, a professor at the Seoul-based University of North Korean Studies. "With this post, he has been given all responsibility and rights to secure a stable structure for future succession."

Jang, married to Kim's younger sister, is widely believed to be a key backer of the North Korean leader's third son, Kim Jong-un, who several analysts think will be his father's eventual successor. Many believe Jang may lead a collective leadership after Kim's death and help groom one of the sons for the top job.