Officials said that the chances of finding survivors was increasingly unlikely after Saturday's discovery of the body of Nam Ki-Hoon, senior chief petty officer on the ship, was retrieved from the petty officers' mess hall of the sunken corvette.
"We decided to request the military to stop the search and rescue operation," Choi Soo-Dong, representing the families, told reporters after the families of the missing crew received confirmation of Nam's death.
Filled with water
The spokesman for the military Joint Chiefs of Staff said that divers had found the mess hall of the ship filled with water, while others had examined the captain's chamber and the communications centre.
Attempts to go deeper inside the hull were hampered by wires and debris detached from the ceiling and walls, he told the AFP news agency.
Officials suspected that most of the missing were in the rear section of the hull.
The navy will now work to recover the 1,200-ton Cheonan.
"We have called off the operation. From now we will focus on salvaging the wreckage," a navy spokesman said.
Officials have said the salvage effort could last a month.
The disaster site is close to the disputed border which was the scene of deadly naval clashes between North and South Korea in 1999 and 2002 and of a firefight last November.
Officials have not found the cause of the explosion that broke the 1,200-tonne corvette in two in the Yellow Sea on March 26, but there have been suggestion that it was caused either by a torpedo or a mine.
However, shortly after the sinking South Korean officials noted that there was no evidence that the North was to blame.