Al Jazeera's Kathy Novak, reporting from Seoul, said family separation is seen as a "very pressing and emotional humanitarian issue", - particularly in South Korea.
Japan downplayed South Korea's offer to hold military talks with North Korea, saying the priority should be piling pressure on Pyongyang through sanctions.
The proposed dialogue would be aimed at decreasing the tensions in the region.
North Korea has not responded to the South's proposal yet.
North Korea says the South abducted the 12 waitresses and the restaurant manager and has demanded their return, but the South has said the group chose to defect of its own free will. Cho said this matter is not included on the talks agenda.
Seoul and Pyongyang remain far apart on the prospects of an eventual peace deal.More news: OH shooting: 1 dead, 8 wounded in ambush at gender reveal party
If a meeting takes place, it will mark the first military talks between the neighbours in three years. But the South brushed the suggestion off, demanding Pyongyang first take steps to denuclearize.
It represented the Moon administration's first formal offer of inter-Korean talks.
Although Seoul did not define the meaning of "hostile activities", talks are likely to focus on controversial propaganda broadcasts and joint US-South Korea military drills, reports the Daily Telegraph.
The envisaged plan for family reunions faces its own daunting challenges.
"Meeting with their families while they are alive must be prioritized more than any other political concerns", said Kim Sun-hyang, acting president of South Korea's Red Cross. The Unification Ministry said it has about 130,000 South Korean applicants for such meetings on file, but only 60,000 of those are alive. A senior official with the Ministry of National Defense said it was "continuing to hold discussions on inter-Korean military talks with the Ministry of Unification and other agencies involved in practical matters". But this strategy has for the moment been douchée by the acceleration of the nuclear and missile programs in Pyongyang. But it remains to be seen whether the North will accept the proposal as it's still demanding South Korea repatriate twelve female North Koreans who defected to the South a year ago. But the isolated country, in the past, has repeatedly refused to engage in talks with Seoul unless the South hands over 12 waitresses who defected to Seoul previous year.
"South Korea has no hostile policy toward North Korea as (the president) clearly stated in his Berlin doctrine that he will never pursue the collapse of North Korea and an absorption-based reunification", Unification Minister Cho Myoung-gyon said in a statement.