North and South Korea have agreed to form a joint women's hockey team and march under the same flag for a parade at next month's Winter Olympics, in a major step towards easing tensions on the peninsula.

Officials from both sides hope the games, which will be held just 50 miles south of the Demilitarized Zone (DMZ) will help ease tensions between the north's isolated dictator and the south's US-allied president.

A North Korean delegation will visit the South next week to review the facilities at the Games venue, Yonhap reported.

South Korea also agreed to send its athletes to the North's Masikryong ski resort for training ahead of the Pyeongchang Olympics that run through February 5 to 25.

North Korea has agreed to send a 550-member delegation, including 230 cheerleaders and a 30-strong taekwondo delegation.