North Korea is said to be developing a new short-range surface-to-ship ballistic missile which cannot be intercepted by existing weapons of South Korea.
The country's latest missile is believed to be an improved version of a surface-to-surface missile which has been around for quite some time.
"The North [Korea] is developing a new ground-to-ship ballistic missile with a range of 200-300 km, an improved version of the KN-02 ground-to-ground ballistic missile. We're trying to verify the report," an intelligence source familiar with the matter told the Seoul-based daily Chosunilbo.
The intelligence official also suspects that Iran has a key role in the making of the latest version. Iran and North Korea were earlier alleged to have worked together in each other's nuclear programmes.
North Korea already possesses two such missiles. The KN-01 missile has a target range of about 160km while the Silkworm can strike up to 100km, but both are not ballistic.
If the latest reports turn out to be true, South Korea does not have the capacity to stop the missile as it reportedly travels nearly five times faster than sound.
Recently, the North Korean army was placed on high alert after the country threatened to launch pre-emptive strikes against South Korea and US interests in the region.
Pyongyang's remarks have sharpened in recent weeks amid a US-led joint naval drill with Japan and South Korea.