North Korea has hit back at South Korea's claim it started an artillery exchange on Wednesday, claiming instead that the South must have mistook construction noise for shelling.

Apparently offended by Seoul's claims, Pyongyang said the South Korean reaction was "preposterous" and that the sounds were those of "normal blasting" at a building site located on the coast.

On Wednesday, South Korean Defence Ministry spokesman Kim Min-seok accused North Korea of opening fire near the Northern Limit Line in the Yellow Sea and said the move was met by a retort form the South as three shells were fired back. Both sides' shells landed in the water, and there were no reports of casualties, Kim Min-seok added.

At the time South Korea said it had been taken aback by the move and insisted no drilling was taking place in the area at the time of the fire exchange.

The area has been the stage of a violent confrontation as it still is a contested slice of sea and a dozen of lives have been lost since the standoff started in the 1990's and last November the North fired shells at the South, killing four people.

On Thursday, North Korea's official KCNA news agency accused Seoul of overreacting to "normal blasting" from a North Korean construction project "aimed at improving the standard of people's living."

"It was preposterous in the age of science when latest detecting and intelligence means are available that they mistook the blasting for shelling," the KCNA report said.

"It was a tragicomedy that they indiscriminately reacted to what happened with counter-shelling even without confirming the truth about the case in the sensitive waters."

The new confrontation came days after renewed hopes that the two countries were making efforts to improve their relation.

Two weeks ago nuclear envoys from both countries met for the first time in over two years, which was followed by the North sending an envoy to New York, where he met U.S officials.

Calling for both sides not to give up on earlier more encouraging developments the U.S. State Department spokeswoman Victoria Nuland told reporters in Washington that "This incident is now over and we now need to move back to the main business at hand, which is for North Korea to show ... that it's truly committed to the kind of goals that we have together in terms of denuclearization."