A nuclear-powered submarine of the US is participating in a naval drill in South Korea amid rising tensions in the Korean peninsula sparked by North Korea's reported move to carry out a nuclear test.

The USS San Francisco (SSN-711), a Los Angeles-class nuclear submarine, has already arrived at the South Korean port city Jinhae, 410 kms from the capital Seoul.

Besides the submarine, two other American warships, equipped with missiles and torpedoes, have arrived in the nearby port city of Busan.

The vessels will take part in a joint naval drill by South Korea and the US. South Korea will be employing ten warships in the drill.

South Korea has said that the exercise was previously scheduled and is not a response to North Korea's recent threats.

However, officials are tight-lipped about details of the proposed drill. All that they have said is that the exercise is aimed at testing the combat readiness of both the countries.

"We are closely looking into whether [increased activity] is a manipulating tactic or preparations for a nuclear test indeed. The North is ready to conduct an atomic test at any time if the leadership makes a decision," said the Chairman of the Joint Chiefs of Staff (JCS), Jung Seung-jo.

Jung added: "The upcoming drill, which had already been planned, is not targeted for (North Korea's) nuclear test."

Both sides hope that the naval drill will send strong signals to the North if it presses ahead with its third nuclear test defying international warnings.

The South had earlier warned of "grave consequences" if the North conducts a test.

"The (Seoul) government urges North Korea to stop all provocative speeches and abide by international obligations, including those stipulated in UN Security Council resolutions," said South Korean President Lee Myung-bak after a meeting with top officials.

Lee has also ordered the defence ministry to keep military forces in top readiness to face any eventuality.