Hardliners in the Bush administration appear to be winning an internal struggle for control over policy towards North Korea, shifting the focus to containing the communist regime and crippling its illicit source of finances at the expense of diplomatic negotiations over its nuclear programme.

US officials and analysts say Chris Hill, the State Department's chief negotiator in six-nation talks with Pyongyang, risks being marginalised in a policy battle that has characterised divisions within Washington since President George W. Bush took office in 2001.