South Korea is preparing a new formula for gradual reunification with the communist North under the goal of "one nation, one state," a ranking government official said Thursday.

National Unification Minister Lee Hong-koo said the new plan centered on creating a loose confederation of two radically different political and economic systems as an interim step toward reunification of the country divided at the end of World War II.The government has completed opinion surveys on the issue and will finalize the new formula by the end of February following a series of public hearings, he said.

Lee noted that Seoul and Pyongyang have devised reunification plans in the past only to have them rejected by the other side.

"Now that the two sides are in a stage where they can have discussions and try to compromise, we plan to present a new unification formula and try to narrow differences," Lee said.

Lee said Seoul's new formula will be based on President Roh Tae-woo's July 7, 1988, declaration in which he proposed that the two Koreas, divided at the end of World War II in 1945, pursue common prosperity as members of the same national community.

Roh in the declaration said South Korea will not regard North Korea as a competitor in world affairs and offered to help North Korea to improve relations with the United States, Japan and other free world nations.

"The new formula will try to reinforce steps to be taken in the interim process leading to unification," Lee said.