North Korea rocket launch
Video grab from KCNA shows Unha-3 rocket launching at North Korea's West Sea Satellite Launch Site, in Cholsan county - Reuters

The US has decribed North Korea as "needlessly provocative" after the Communist state threatened to conduct its third nuclear test, targeting Washington.

Defence Secretary Leon Panetta says the Obama administration is "prepared to deal with any kind of provocation" from North Korea in response to the latest US-backed sanctions against Pyongyang.

Panetta added that North Korea "have the capability, frankly, to conduct these tests in a way that makes it very difficult to determine whether or not they are doing it."

The US State Department has warned that North Korea faces further "isolation" if the country fails to take "concrete steps to address the concerns of the international community over its nuclear and missile programmes".

North Korea had earlier spoken of an "upcoming" nuclear test without specifying the details, but at the same time it lashed out at the US.

"We are not disguising the fact that the various satellites and long-range rockets we will launch, as well as the high-level nuclear test we will carry out, are targeted at the United States, the sworn enemy of our people. Accounts with the US need to be settled with force, not with words," said the powerful National Defence Commission.

If conducted, this will be the first nuclear test under the leadership of Kim Jong-un. The test will also send clear signals to the world that the new leader continues to tread the path of his father Kim Jong-il and grandfather Kim Il-sung, both of whom bolstered the country's military programmes despite international condemnation.

People who are familiar with the matter predict that Pyongyang may conduct the test to mark Jong-Il's birthday in mid-February, when the newly elected Park Geun-hye will also be sworn in as South Korean President. North Korea's earlier nuclear tests were in 2006 and 2009.

Although some reports suggest that the latest pronouncement by North Korea is meant to be taken seriously, others say it is merely an outburst of rhetoric. But US intelligence reportedly believes that North Korea is making steady progress with its military and missile capabilities.

"It's a major test for Kim Jong-un. Unlike the rocket launching in December, which the North has said was conducted because it was his father's dying wish, a nuclear test will be Kim Jong-un's decision, one for which he will be held responsible," a North Korean specialist at Dongguk University in Seoul told the New York Times.

The threat has also come at a time when a re-elected Obama administration is struggling to deal with the nuclear ambitions of Iran. The standoff with Iran is likely to pose a huge challenge to Obama in his second term.