(Adds Tweet from U.S. Treasury secretary, saying sanctions "in the coming weeks", paragraph 3)
* Pence says won't let North Korea hide behind Olympics
* Kim Jong Un's sister to attend Olympic opening ceremony
* Sister is blacklisted by the United States
* North Koreans in one of largest peacetime crossings of border
By Hyonhee Shin and Tim Kelly
SEOUL/TOKYO, Feb 7 (Reuters) - U.S. Vice President Mike Pence vowed tough new sanctions against North Korea and called it the world's most tyrannical regime on Wednesday, two days before he is due to attend the winter Olympics, along with two of the North's most senior officials.
Speaking in Tokyo on his way to South Korea, which is hosting the Games over the next three weeks, Pence said he would soon announce the stepped-up sanctions in an effort to pressure the North to abandon its nuclear and missile programmes.
U.S. Treasury Secretary Steven Mnuchin said in a tweet that the sanctions would be unveiled "in the coming weeks" and urged all countries to fully implement existing U.N. sanctions and to back the U.S. pressure campaign by expelling North Korean "financial facilitators and trade reps".
The Games, being staged 80 km (50 miles) from the heavily militarised border between the Koreas, is set for an awkward political encounter, with Pence as well as the North Korean leader's younger sister attending Friday's opening ceremony.
South Korea wants to use the event to re-engage with North Korea and open the way for talks to resolve one of the world's most dangerous crises, in which U.S. President Donald Trump and Pyongyang have swapped nuclear threats.
"I'm announcing today the United States of America will soon unveil the toughest and most aggressive round of economic sanctions on North Korea ever," Pence said after meeting Japanese Prime Minister Shinzo Abe.
"We will continue to isolate North Korea until it abandons its nuclear and ballistic missile program once and for all."
Washington has led a global campaign to force North Korea to give up development of nuclear missiles capable of hitting the United States and has taken a tougher line recently than its allies in Seoul, exposing tensions that South Korean President Moon Jae-in could struggle to conceal at the Olympics.
Pence has voiced scepticism that the North Korea will use the Games for crude propaganda. As his guest at the opening ceremony, he is taking the father of Otto Warmbier, an American student who died last year after being imprisoned in North Korea for 17 months.
Sitting in the same stadium as VIP guests will be Kim Yo Jong, 28-year-old sister of North Korean leader Kim Jong Un, and Kim Yong Nam, North Korea's nominal head of state.
Japan's Abe, whose nation has been within range of North Korean missiles for decades, will also attend the ceremony.
Kim Yo Jong would be the first member of the Kim family to cross the border to the South. She is a propaganda official and was blacklisted last year by the U.S. Treasury Department over alleged human rights abuses and censorship.
"It shows the North's resolve to defuse tension on the Korean peninsula," Blue House spokesman Kim Eui-kyeom told a news briefing.
Pence has not ruled out the prospect of meeting North Korean officials during the Games, but President Trump, whose daughter and adviser Ivanka will attend the Olympic closing ceremony, has cast doubt on the value of U.S. talks with Pyongyang any time soon.
"We will not allow North Korea to hide behind the Olympic banner the reality that they enslave their people and threaten the wider region," Pence said.
The White House has also cautioned against reading too much into remarks Pence made en route to Japan.
Analysts said that while Seoul appeared keen to set up a U.S.-North Korea meeting, the chances of this happening did not look high.
"The fact that the U.S. is bringing along Otto Warmbier’s father suggests that their interest in engaging with the North Koreans while in Korea is pretty low," Abraham Denmark, a senior defense official under former President Barack Obama, told a conference call organised by the Wilson Center think tank.
The United States has said repeatedly that any future talks with North Korea must have the aim of North Korea's denuclearization, something Pyongyang has rejected.
U.S. Secretary of State Rex Tillerson told reporters travelling with him on a visit to Jamaica that he did not anticipate a meeting at the Olympics, but "it just depends on the circumstances as to whether this is the right time or not."
He added that sanctions pressure would continue "until North Korea gets on a pathway to giving up its nuclear weapons".
"That is an important message for the North Koreans to understand. Until you do something meaningful - sending some athletes and an orchestra down to Seoul, to show us that yes, you can play sports and you enjoy music - that doesn’t change anything," he said.
South Korea asked the United Nations on Wednesday for an exemption to allow a U.N. sanctioned North Korean official, Choe Hwi, to attend the opening ceremony with Kim Yo Jong.
Pyongyang told Seoul that Choe Hwi, chairman of the National Sports Guidance Committee, would travel to Pyeongchang as part of its delegation.
The U.N. Security Council imposed a travel ban and asset freeze on Choe on June 2 last year when he was vice director of the Workers' Party of Korea Propaganda and Agitation Department, which controls ideological messaging through the media, arts and culture. Kim Yo Jong now holds that position.
Abe said he and Pence had agreed in talks that they could "never accept a nuclear-armed North Korea".
Pence visited a Patriot PAC-3 missile battery, Japan's last line of defence against any strike from North Korea, which fired ballistic missiles over the country last year.
A group of 280 North Koreans arrived in South Korea on Wednesday to spur on athletes from the two sides at the Games. They included a 229-member cheer squad, taekwondo performers, journalists and the sports minister.
On Tuesday, a ferry carrying a North Korean orchestra arrived for the Games. Since it docked, North Korea has asked the South to provide oil for refuelling.
Oil has taken centre stage in global efforts to curb Pyongyang's nuclear and missile programmes, with Washington urging a drastic cut in energy supplies to the isolated country.
Reporting by Hyonhee Shin and Christine Kim in SEOUL; Additional reporting by Heekyong Yang in SEOUL, Soyoung Kim and James Pearson in PYEONGCHANG, Linda Sieg in TOKYO, David Brunnstrom and Matt Spetalnick in WASHINGTON and Michelle Nichols at the UNITED NATIONS; Editing by Clarence Fernandez and James Dalgleish