Despite the applause, Mr Lee has faced a stormy few months in office
South Korea's President, Lee Myung-bak, has proposed reviving direct talks with North Korea, in a major policy shift.
Mr Lee told parliament he was willing to carry out previous bilateral summit accords and provide the impoverished North with food aid.
The apparent softening of Mr Lee's hardline stance was marred by news that a South Korean woman had been shot dead while on a tourist trip to the North.
It also came on day two of six-party talks on North Korea in Beijing.
The negotiations - which include representatives from the US, China, Russia and Japan as well as the two Koreas - are seeking to agree ways the North's recent declaration of its nuclear activities can be verified.
Correspondents say President Lee's previous hardline stance towards the South's communist northern neighbour had left Seoul sidelined in these talks.
The president has also been buffeted by protests and crises at home, and has seen his approval ratings decline steeply in the five months of his term.
"Full dialogue between the two Koreas must resume," the president told the National Assembly in Seoul, which is finally convening after weeks of delay amid a domestic political crisis over US beef imports.
He said his government was "willing to engage in serious consultations on how to implement the inter-Korean agreements made so far", including summit pacts reached by his predecessors in 2000 and 2007.
Mr Lee, who took office in February, drew accusations from the North that he was a "traitor" and US "sycophant" when he turned away from the Sunshine Policy of engagement of past presidents.
He caused Pyongyang to bristle when he suggested Seoul would review previous summit accords signed by the North Korean leader Kim Jong-il, correspondents say, and the North cut off dialogue.
On Friday the president also appeared to backtrack on earlier pledges to link the provision of economic aid to North Korea to progress on the nuclear issue.
Long-running talks on the North's nuclear programme have restarted
Seoul "is ready to co-operate in efforts to help relieve the food shortage in the North as well as alleviate the pain of the North Korean people", he said.
Meanwhile, multilateral talks continued in Beijing on North Korea's nuclear programme.
The talks began again on Thursday, after the North finally submitted an account of its nuclear activities following months of delay.
US negotiator Christopher Hill said Thursday's discussions of steps required to verify the information North Korea has submitted had got off to a "good start".
Discussions will also include delivering the energy aid promised to the North in response to its co-operation on the nuclear front, officials said. The North complains it has received only 40% of the total aid agreed.
In Seoul, President Lee's new pledges came as parliament finally convened, after a weeks-long boycott by opposition deputies which paralysed Mr Lee's legislative programme.
During the session, Mr Lee said he would press ahead with his agenda, and submit "about 200 bills concerning deregulation".
Mr Lee's decision in April to reopen South Korea to US beef imports - banned in 2003 after the discovery of mad cow disease in American cattle - prompted near-daily protests and has dominated the domestic political agenda.
However, correspondents say Mr Lee's plans to deregulate the economy, introduce tax cuts and reforms pension systems could also meet significant opposition.