South Korea says that its companies would compensate people forced to work under Japan’s 1910-1945 occupation. U.S. President Joe Biden, whose administration has pressed its two allies to reconcile, hailed the announcement as "groundbreaking."

South Korea said on Monday that its companies would compensate people forced to work under Japan's 1910-1945 occupation, seeking to end a dispute that has undercut U.S.-led efforts to present a unified front against China and North Korea.

The proposal was welcomed in Tokyo but faced immediate backlash from some victims and South Korea's main opposition party, who accused the government of capitulating to Japan.

U.S. President Joe Biden, whose administration has pressed its two allies to reconcile, hailed the announcement as "groundbreaking."

A Japanese government source close to Prime Minister Fumio Kishida told reporters that the United States has been pressing both countries to reconcile, but that a main factor that triggered Yoon's push for reconciliation is the geopolitical threat from North Korea.

The disagreements over labour and women forced into Japanese military brothels have bedevilled ties between the two pivotal U.S. allies for years, but South Korean President Yoon Suk Yeol has made a push to repair the relationship.

Under the plan, South Korea would compensate former forced labourers through an existing public foundation funded by private-sector companies, Foreign Minister Park Jin told a briefing.

"The soured South Korea-Japan relations should no longer be neglected, and we need to end the vicious cycle for the national interest, for the people," Park said. He said he hopes Japan responds sincerely, including by "implementing its previous public statements expressing remorse and apology."

Japanese Prime Minister Fumio Kishida said he welcomed the proposal and said he would work closely with Yoon.