North Korea has said it will cut all relations and communications with South Korea after the latter imposed sanctions on it for allegedly sinking one of its warships.
The official Korean Central News Agency (KCNA) reported on Tuesday that the North would expel all South Koreans from a jointly owned factory park in the border town of Kaesong.
"The Committee for the Peaceful Reunification of Korea, accordingly, formally declares that from now on it will put into force the resolute measures to totally freeze the inter-Korean relations, totally abrogate the agreement on non-aggression between the north and the south and completely halt the inter-Korean cooperation," KCNA said.
Pyongyang's announcement came after South Korea reportedly resumed propaganda broadcasts into North Korea - following a break of six years.
Tensions have risen sharply over the sinking of the Cheonan on March 26 off the west coast of the Korean peninsula, that left 46 South Korean sailors dead.
The attack was South Korea's worst single military loss of life since the 1950-53 Korean War.
Earlier reports said that North Korea had ordered its armed forces to be placed on combat alert.
The order came directly from North Korea's leader, Kim Jong-il, South Korea's Yonhap news agency said on Tuesday, quoting sources inside the North.
South Korea has said it will no longer tolerate provocations from the North after a multinational investigation pinned the blame for the Cheonan's sinking on a North Korean torpedo attack.
North Korea has threatened "all-out war" in response to any moves to punish it.
Paul Chamberlin, the president of Korea-US Consulting Inc, told Al Jazeera: "The situation with North Korea is always dangerous to some extent.
"We should remember that in January of last year, North Korea declared that all of the previous inter-Korea agreements were nullified. That included a non-aggression pact. So this kind of belligerent talk is not unusual.
"When they attacked the Cheonan, that was clearly, by any definition or perspective, an act of war.
"What the North is doing now is trying, in the eyes of its ruling elite and public, to make virtue out of necessity."
As part of its retaliatory steps, South Korean army engineers began installing loudspeakers on Tuesday along the border with the North, with plans to also construct 11 giant electronic signboards.
The South Korean defence ministry said it resumed the FM radio broadcasts on Monday evening, starting with a four-hour programme entitled Voice of Freedom, which was being aired three times a day.
A spokesman told the AFP news agency the programme included messages on freedom and democracy from a military anchorwoman, a song from a South Korean girl band extolling freedom of choice, and pointed comments on how obesity rather than hunger is a problem in the South.
|North Korea has warned of 'all-out war' if it is punished for the sinking of the Cheonan [EPA]
The UN chief has joined the US in ratcheting up pressure on North Korea, calling for action from the Security Council in response to the Cheonan incident.
Speaking at UN headquarters in New York on Monday, Ban Ki-moon said there was "overwhelming and deeply troubling" evidence that Pyongyang was behind the .
"My sincere hope is that this will be dealt with by the Security Council, and they should take necessary measures on this matter," he said.
"There must be some major step to be taken. The evidence is quite compelling. There is no controversy."
Ban's comments came after Washington announced that US forces would conduct joint naval exercises with South Korea "to ensure readiness and to deter future aggression" by North Korea.
The announcement of the military exercises came after South Korea's president vowed that North Korea would pay the price for what he called its "brutality" in the sinking.
In a televised address on Monday, Lee Myung-bak said: "I solemnly urge the authorities of North Korea ... to apologise immediately to the Republic of Korea [South Korea] and the international community".
He ordered a ban on all trade, investment and visits with North Korea and stopped the North's commercial shipping trade using cheaper routes through waters controlled by the South.
The US has some 28,000 troops based in South Korea, while North Korea is believed to have around one million soldiers in what is one of the largest standing armies in the world.
However, despite their numbers of personnel, experts say the North's armed forces are poorly equipped and it is unlikely to risk full scale combat against much better armed US and South Korean troops.