North Korea has threatened to attack the South following checks for weapons of mass destruction on its naval fleet.
Pyonyang was already facing internationals after the nuclear test at the weekend but this unequivocal act of war is being seen as a major escalation in the North's international relations.
The threat is thought to have been provoked after Seoul joined a US-led initiative to check vessels suspected of carrying nuclear equipment.
A North Korean army spokesman also said the country was not obliged to maintain the armistice signed at the end of the 1950-53 Korean War because Washington had ignored its responsibility as a signatory by drawing South Korea into its naval initiative.
The threat comes after South Korean media reported that Pyongyang had restarted the Yongbyon plant that makes weapons-grade plutonium.
A spokesman for the North's army said: "Any hostile act against our peaceful vessels including search and seizure will be considered an unpardonable infringement on our sovereignty and we will immediately respond with a powerful military strike."
South Korea had confirmed it was joining the naval exercise, called the Proliferation Security Initiative.
Pyongyang also appeared to have fired a third short-range missile after it added to tensions with a launch of two others.