A blanket ban on all border crossings would in effect shut down a joint North-South industrial park near the town of Kaesong on the North Korean side of the border.
"The present inter-Korean relations are at the crucial crossroads of existence and total severance"
North Korean military statement
The park, which employs some 30,000 North Koreans, is a highly symbolic joint venture between the two Koreas in operation and its closure would mark a further deterioration of increasingly icy relations on the peninsula.
Some 1,900 South Koreans working in the industrial park are believed to live in nearby Kaesong city.
Another venture, a South Korean resort at the scenic Diamond Mountain, would also likely close.
|North Korea-South Korea border
Frontier between two Korea's formally known as Military Demarcation Line, with a 2km-wide Demilitarised Zone (DMZ) running on either side.
Border drawn along 38th parallel when armistice was signed halting the 1950-53 Korean War.
A formal ceasefire was never signed, meaning North and South Korea remain officially at war.
An estimated two million troops line either side of the border, ready to go to war at a moment's notice.
Commenting on the North Korean move, a spokesman at the South Korean unification ministry called for a return to dialogue with the North.
"We find it regrettable that the North has decided to take those measures," said Kim Ho-Nyoun.
"If the North carries them out, it would have a negative impact on what has been achieved in inter-Korean relations."
In its report on Wednesday, North Korea's official Korean Central News Agency (KCNA) described the decision to close the border as a "first step" in response to what it said was Seoul's failure to honour agreements reached at inter-Korean summits in 2000 and 2007.
"The South Korean puppet authorities' unchanged stand and attitude towards the historic two declarations have been finally confirmed," KCNA quoted the military notice as saying.
What it called confrontational moves made by South Korea were pushing relations on the Korean peninsula "beyond the danger level", it added.
"The South Korean puppet authorities should never forget that the present inter-Korean relations are at the crucial crossroads of existence and total severance."
In recent weeks North Korea has threatened to expel South Koreans working in the Kaesong zone unless Seoul called off what it called a policy of "reckless confrontation".
Relations between North and South have deteriorated markedly since the inauguration of Lee Myung-bak as South Korean president at the beginning of the year.
Lee has taken a tougher stance than his predecessors on relations with the North, saying that South Korean donations of aid would no longer be given unconditionally.
|Balloon airdrops of anti-North Korean leaflets have angered Pyongyang [Reuters]
Another issue that appears to have irritated the North recently has been the airdrops of millions of leaflets sent across the border by South Korean activists.
The leaflets have been carried by unmanned helium balloons and have triggered increasingly vocal complaints from North Korean officials.
The most recent leaflets have contained material questioning the health of Kim Jong-il, the North Korean leader – a particularly sensitive subject in the North.
South Korean officials have urged the groups behind the leaflets to suspend their activities, but say they are not doing anything illegal so cannot prevent further balloon flights.
Last month North Korea accused the activists of a "smear campaign" and threatened to turn the South into "debris".
It insists Kim is in good health and remains in charge of the country.
Kim has not been seen in public in several weeks and speculation has been mounting that he is unwell, having suffered a stroke, or is possibly already dead.