The agreement is the first of its kind for Japan but it makes a major exception by not including Tokyo's busy airports.

Under the agreement, the two Asian nations will be able to increase the number of passenger and cargo flights and the destinations where airlines fly without seeking government permission.

Both Japan and South Korea have been trying to expand flight capacity as they battle rivals to the south to be Asia's top aviation hub.

Currently, flights between the two nations operate from 26 locations in Japan and seven in South Korea.

Japanese and South Korean officials reached the agreement in a three-day meeting that ends Friday, the Japanese transportation ministry said.

"The South Korean side agreed to our proposal late Thursday," said a ministry official.

Japan insisted that the agreement not include Tokyo, where both Narita and Haneda airports are operating at full capacity.

Japan and South Korea in 2003 started flights between Haneda and Seoul's Gimpo, both domestic airports which are more centrally located, to accommodate a rising number of business travellers and tourists between the countries.

Japan has been expanding its airports and will later this year start "shuttle flights" from Tokyo Haneda, which is Asia's busiest airport, to Shanghai.

South Korea has also been vying to make Incheon International Airport near Seoul more of a regional hub.