1998 file footage of Kim Jong-il

SEOUL (Reuters) - North Korea said on Thursday its parliament will convene for the first time in eight years, setting the scene for de facto leader Kim Jong-il to be elected president at a time of heightened tensions on the Korean peninsula.

The official Korean Central News Agency (KCNA) said the Supreme People's Assembly will open in Pyongyang on September 5.

Kim is widely expected to be named president by the assembly, before the secretive Stalinist state celebrates the 50th anniversary of its founding on September 9.

The assembly, the nation's unicameral legislative body, last met in April 1994, three months before the death of Kim's father and the founder of North Korea, Kim Il-sung.

Last month, elections were held for the 687-seat parliament, with Kim voted in from a constituency in the capital Pyongyang.

Radio Press, a Japanese news agency which monitors North Korean broadcasts, said it was believed parliament would elect the state president and prime minister and approve the budget.

South Korean President Kim Dae-jung

North Korea's media have been hinting for days about the communist world's first dynastic succession.

The presidency is the last of the three titles Kim has yet to inherit from his father. He was named general secretary of the ruling Workers' Party last October and has been the supreme military commander for several years.

The KCNA has said committees in Tanzania, Ghana and Italy have been formed to support Kim's presidency. Pyongyang often signals policy changes by announcing the activities of "friendship committees" in other nations.

If the reclusive Kim does become president, it opens the way for him to visit other nations as head of state and for leaders of other nations to visit him.

Kim has not traveled abroad or met any foreign dignitaries since his father's death, North Korean watchers said.

As president, Kim may visit Pyongyang's main ally China and Moscow, a key aid donor until the collapse of the Soviet Union.

It could also set the stage for a possible summit with South Korean President Kim Dae-jung, who has proposed such a meeting.

The Koreas remain technically at war nearly a half-century after their 1950-53 conflict ended in an uneasy truce that has yet to be replaced by a permanent peace.

The parliament will meet at a particularly turbulent time.

Famine in North Korea has killed up to 2.4 million over the past three years, a U.S. congressional team said on Wednesday after a visit to the country.

North Korea is now in the eighth year of a severe depression with much of its industry idle and chaos in the rural sector after three years of floods and drought.

Meanwhile, political and military tensions have mounted on the peninsula where South Korea and the United States are conducting joint military exercises this week and next.

The North Korean army rattled its sabers with a statement on Wednesday denouncing the exercise.

"The U.S. and the South Korean puppets must remember that the Korean peninsula is in a state of temporary cease-fire and that the DPRK (North Korea) and the U.S. are technically at war," it said.

"If the U.S. and the South Korean puppets want to solve the problem through military means, not through dialogue, we will exercise our right to military option."

More than a million soldiers confront each other on either side of the divided Korean peninsula, the last Cold War frontier and one of the most militarized borders on the planet.

Washington this week expressed concern about what could be an underground nuclear complex being built in North Korea and said it would raise the issue at a meeting in New York on Friday.

Reports in the New York Times and Washington Post said U.S. intelligence analysts believe thousands of North Koreans are digging at a vast site northeast of a former nuclear research center at Yongbyon.

U.S. officials said that such a facility could represent a decision by Pyongyang to abandon a key four-year-old agreement to freeze its nuclear weapons program.

That would be certain to raise tensions on the peninsula, where the United States maintains 37,000 troops.

The South Korean foreign ministry has said there was no hard evidence to show North Korea was restarting the program.

Officials said Deputy Assistant Secretary of State Charles Kartman will ask North Korea about the complex when he meets North Korean Vice Foreign Minister Kim Gye-kwan on Friday in New York.