The North-South Korea clash appears to be one of the most serious cross-border incidents since the 1950s war [AFP]

North Korea has fired scores of artillery shells onto a South Korean island, killing at least two people amid an exchange of fire as the South's armed forces went on their highest state of alert.

In what appeared to be one of the most serious border incidents since the 1950-53 war, South Korea's government convened in an underground war room during the incident on Tuesday.

Seoul also sent a fighter jet into the area, close to a disputed maritime border on the west of the Korean peninsula.

Pyongyang said South Korea had initiated the firing of shells, prompting it to take military action.

"Despite our repeated warnings, South Korea fired dozens of shells from 1pm ... and we've taken strong military action immediately," the North's official KCNA news agency said in a brief statement.

It did not elaborate whether North Korea had suffered any damage from the exchange of fire.

North Korea's supreme command later vowed "merciless military attacks with no hesitation if the South Korean enemy dares to invade our sea territory by 0.001 mm".

Military drills

South Korea said it was conducting military drills off the west coast, but that its firing exercises were not aimed towards the North.

"We were conducting usual military drills and our test shots were aimed toward the west, not the north," a South Korean military official said. The South has scrambled F-16 fighter jets to assess the situation on Yeonpyeong island.

Lee Myung-Bak, the South Korean president, said in a statement: "Our military... will sternly retaliate against any further provocations.

"North Korea's shelling of Yeonpyeong island constitutes a clear armed provocation. Furthermore, its reckless shelling of civilian targets is unpardonable. North Korean authorities must take responsibility."

About 50 North Korean shells landed on the South Korean border island of Yeonpyeong near the tense Yellow Sea border, damaging dozens of houses and sending plumes of thick smoke into the air, YTN television reported.

Lee Jong-Sik, an island resident, told YTN: "At least 10 houses are burning. I can't see clearly for the smoke. The hillsides are also on fire. We were told by loudspeakers to flee our homes."

Steve Chao, Al Jazeera's Seoul-based correspondent, said that the island is the base of South Korea's second fleet that has been attacked by North Korea in the past.

"There was a joint South Korea-US naval exercise in the area yesterday," he said.

'Firing provocation'

Two South Korean Marines, who were part of a contingent based permanently on Yeonpyeong Island, were killed, the military said.

The military said 17 Marines were injured and YTN said two civilians were also hurt.

"A North Korean artillery unit staged an illegal firing provocation at 2:34 pm [05:34 GMT] and South Korean troops fired back immediately in self-defence," a ministry spokesman said.

"A Class-A military alert issued for battle situations has been imposed immediately," the spokesman said.

Yeonpyeong lies just south of the border declared by United Nations forces after the inconclusive war six decades ago, but north of the sea border declared by Pyongyang.

The United States has also strongly condemned the attack and called on North Korea to "halt its belligerent action and to fully abide by the terms of the armistice agreement".

"The United States is firmly committed to the defence of our ally, South Korea, and to the maintenance of regional peace and stability," the White House said in a statement.

There are around 28,000 US forces stationed in South Korea, and a US official said the US army is closely monitoring the situation.

The Yellow Sea border was the scene of deadly naval clashes in 1999, 2002 and last November.

The two Koreas are still technically at war and tension rose sharply early this year after Seoul accused the North of torpedoing one of its navy vessels, killing 46 sailors. Pyongyang has angrily rejected the charge.

In late October, North and South Korean troops exchanged fire across their Cold War border, coinciding with a state of high alert for the South's military in the buildup to the G20 summit of world leaders in Seoul earlier this month.

The firing comes after Kim Jong-Un, the little-known youngest son of Kim Jong-Il, was officially recognised as number two in North Korea's political system, clouding outsiders' view of its military and nuclear intentions.

Nuclear disclosure

The latest crisis erupted as a US special envoy headed to China on Tuesday to seek its help in curbing North Korea's new nuclear project, revealed to US experts who described a sophisticated programme to enrich uranium.

South Korea's Lee, right, warned that Seoul would react 'sternly' to 'further provocation' [Reuters]

Stephen Bosworth has also visited South Korea and Japan this week to discuss the disclosure, which US officials say would allow the isolated North to build new atomic bombs.

Bosworth, speaking in Tokyo, ruled out a resumption of stalled six-nation talks - aimed at disarming the North of nuclear weaponry in return for aid and other concessions - while work continues on the enrichment programme.

China chairs the talks and is also the North's sole major ally and economic prop. It has come under pressure to play a leading role in resolving the latest nuclear dispute.

China appealed for the six-party talks to resume after the new revelations, and expressed concern over Tuesday's cross-border firing.

"We have taken note of the relevant report and we express concern over the situation," Hong Lei, a foreign ministry spokesman, said.

"We hope the relevant parties do more to contribute to peace and stability on the Korean peninsula," he said. Russia also warned against an escalation of tensions on the peninsula.

Source: Al Jazeera and agencies