It is the first time the National Intelligence Service has acknowledged Kim Ju Ae as Mr Kim's heir.
However, the NIS said that it was still considering "all possibilities" in Pyongyang's succession plan.
Miss Kim has kept a high profile since first appearing in public in late 2022.
"Based on a comprehensive analysis of public activities and the level of respect for Kim Ju Ae since her initial public appearance, at present, she appears to be the most likely successor," said the NIS.
"But we are keeping our eyes open for all possibilities because Kim Jong Un is still young, has no major health problems, and there are many variables."
Miss Kim is thought to be the North Korean leader's second oldest child and is believed to be around 10 years of age.
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South Korea's unification minister, Kim Yung-ho, gave a similar assessment on Mr Kim's daughter at a press conference last month.
"The continuous emphasis on Kim Jong Un's daughter can be seen as evidence that North Korea is hastening to showcase succession intentions amid difficult internal circumstances," he said.
North Korea observers have noted how Miss Kim is now being referred to as a "respected" daughter, rather than a "beloved" one, as she was first introduced during her public debut in November 2022.
The adjective "respected" is reserved for North Korea's most revered. In Mr Kim's case, he was referred to as "respected comrade" only after his status as future leader was cemented.
North Korea's citizens are told that the Kims hail from a sacred bloodline, meaning only they can lead the country. Mr Kim will want to ensure he passes the mantle down to the fourth generation.
Most recently, Miss Kim accompanied her father to the December launch of North Korea's Hwasong-18 solid-fuel intercontinental ballistic missile (ICBM), the most advanced long-range missile in its arsenal yet.
She was also by her father's side when the North launched its Malligyong-1 spy satellite into orbit last November, after two failed attempts. Pyongyang had claimed that Malligyong-1 would give Mr Kim a view of the White House.
Introducing Miss Kim to the public early could be Mr Kim's way of ensuring that her daughter establishes herself before she takes power, analysts have said.
It could also be a way for Mr Kim to overcome prejudices in deeply patriarchal North Korea, which has never been led by a woman.
The first time Miss Kim's existence was ever mentioned was in 2013, after retired American basketball star Dennis Rodman made a controversial trip to North Korea.
Mr Rodman said he had spent time with Mr Kim's family, relaxing by the sea and had "held their baby".
The North Korean leader is extremely secretive about his family - even his wife Ri Sol Ju was kept a secret until some time after the pair married.
Additional reporting by Hosu Lee in Seoul
By Joel Guinto
BBC News