Japan and South Korea are considering resuming security talks between their foreign and defense ministry officials, a Japanese government source said Wednesday, in another sign of improving bilateral relations.

The resumption of a security dialogue, last held in March 2018, is expected to be agreed upon by Prime Minister Fumio Kishida and his South Korean counterpart Yoon Suk Yeol when they meet in Tokyo on Thursday, according to the source.

The moves come after the two East Asian nations effectively agreed last week to resolve a wartime labor compensation dispute that strained Tokyo-Seoul ties in recent years. The countries face shared and growing regional security challenges, including North Korea's missile and nuclear programs and China's military buildup.

The security dialogue was launched with the aim of building mutual trust between foreign policy and defense authorities, with the first meeting taking place in Seoul in June 1998.

But the framework stalled when South Korea's Supreme Court ordered Japanese companies in 2018 to compensate plaintiffs for alleged forced labor during Japan's 1910-1945 colonial rule of the Korean Peninsula, under the government of Yoon's predecessor, Moon Jae In.

The two U.S. security allies have also been at odds over a South Korean destroyer allegedly locking its fire-control radar on a Japanese Maritime Self-Defense Force patrol plane in December 2018.

Although the date is yet to be fixed, among the expected topics to be discussed at the next security meeting will be the setting up of a data-sharing system for real-time tracking of ballistic missiles fired by Pyongyang, according to the source.

The participants in the envisaged working-level gathering may discuss collaboration on the evacuation of Japanese citizens living in South Korea and ensuring their safety in case of a military emergency on the Korean Peninsula, the source added.

On March 6, South Korea decided on a solution to the wartime labor issue in which a South Korean government-backed foundation will pay compensation to the lawsuit plaintiffs on behalf of Japanese corporate defendants.

Welcoming South Korea's plan, Japan said it reaffirms its past statements expressing remorse over its colonial past, and that it is prepared to discuss lifting of export controls imposed in 2019 on materials vital to South Korea's semiconductor industry.

The plan has provoked a harsh domestic backlash in South Korea as the plaintiffs have demanded Japan issue a fresh apology and pay compensation directly.

In a related move, South Korean steelmaker POSCO said it has voluntarily donated 4 billion won ($3 million) to the South Korean foundation.

Following a 1965 bilateral agreement, under which Tokyo gave Seoul $300 million in grants and $200 million in low-interest loans, Japan provided financial and technical assistance to POSCO which was established in 1968.

The pact was signed when the two countries established diplomatic ties with the understanding that the issue of wartime compensation was being resolved "completely and finally."

The South Korean government has indicated it expects private sector firms from both South Korea and Japan to donate to the foundation.