The Olympic Council of Asia (OCA) has said it will only back joint Korean teams at this year's Asian Games in Jakarta and Palembang if it does not mean an increase in athletes.
South Korea's Lee Kee-heung, the President of the Korean Sport and Olympic Committee, confirmed the stance to Yonhap following a meeting with OCA President Sheikh Ahmad Al Fahad Al Sabah in Lausanne.
It means that if unified teams between the South and North do happen, they will only go ahead in a limited number of sports.
Seven sporting governing bodies in South Korea have reportedly expressed interest in forming joint teams with the North at the Asian Games in the two Indonesian cities.
Among them are the Korea Table Tennis Association, but they are said to have asked for all qualified South Korean and North Korean athletes to be allowed to appear.
This would mean the unified team would have more players than other countries, a scenario seemingly now ruled out by the OCA.
"Unless roster spots are added, some South Korean athletes who have been preparing for the Asian Games may suffer," Lee said at Incheon International Airport when talking about the potential of joint teams, as reported by Yonhap.
Basketball, canoeing, gymnastics, judo, rowing and soft tennis are among other Federations said to be interested in a joint team.
The Korean Canoe Federation said they would try to form a unified Korean team in the dragon boat race and hold training sessions on both sides of the border.
The countries could also march jointly at the Opening Ceremony on August 18, as they did at the Pyeongchang 2018 Winter Olympics in South Korea in February.
Athletes in sports such as judo have already been selected, however, to leave a stumbling block.
Sport has been an increasingly key player in the apparent thawing of diplomatic tensions between North and South Korea.
The relationship between the two neighbours, which are still technically at war, was extremely strained in the months prior to Pyeongchang 2018 with the North pushing ahead with missile launches and its nuclear programme amid tense rhetoric with the United States.
However, a four-party International Olympic Committee meeting led to the joint march at the Opening Ceremony and a joint women's ice hockey team taking part.
At the World Team Table Tennis Championships earlier this month, North and South Korea refused to play each other in the women's quarter-finals in Swedish city Halmstad and instead formed a joint team which went straight through to the last four and won a bronze medal.
South Korean President Moon Jae-in and North Korea’s Supreme Leader Kim Jong-un pledged to gradually reduce weapons on both sides during a meeting last month.
Kim will also meet US President Donald Trump in Singapore on June 12 in an historic summit.
It has been agreed that the armistice that ended the Korean War in 1953 could be turned into a peace treaty this year.