North and South Korea appear to be inching towards a fully-fledged war, with both sides taking measures that have raised tensions to new heights.

North Korea has placed an intercontinental ballistic missile (ICBM) equipped with a nuclear warhead on standby, according to a senior North Korean army official, Colonel General Kang Pyo-yong, according to local reports.

Troops have been positioned to launch the missile if they receive the order from North Korean leader Kim Jong-un.

The rocket launched by the North in December 2012 has a range of 11,000 kilometres.

Local reports suggest that Kim has threatened an all-out war. He has visited strategically important military installations and ordered his country's troops to be in full readiness.

The North has also scrapped peace pacts with the South, cut the hotline which was established to prevent conflicts, and shut a shared border point.

North Korea's Committee for the Peaceful Reunification of North Korea said in a statement that the country "abrogates all agreements on non-aggression" reached by the two countries, and "will close the Panmunjom liaison channel between the North and the South."

The statement, which was conveyed by the official Korean Central News Agency (KCNA), said the hotline "can no longer perform its mission due to the prevailing grave situation" and will be "immediately cut off."

The hotline was suspended for nearly 10 months during tensions in 2008-09.

Emergency in South Korea

The latest belligerence has forced top South Korean security officials to hold an emergency meeting. Scores of officials from the ministries of foreign affairs, defence, national intelligence and the unification have been drafted to analyse the situation.

The US has made it clear that the new threats cannot be easily ignored. State Department spokesperson Victoria Nuland said:

"One has to take what any government says seriously. It is for that reason that I repeat here that we are fully capable of defending the United States. But I would also say that this kind of extreme rhetoric has not been unusual for this regime, unfortunately."

The announcement has come hours after the UN Security Council unanimously adopted a resolution on imposing fresh sanctions in a further clampdown on financial transactions.

In response, North Korea has made it clear that "the second Korean war is unavoidable" with a pledge to turn both the South and the US into a "sea of fire" by launching a pre-emptive nuclear strike.

Pouring scorn on the ongoing joint military drill by the US and the South, Pyongyang said: "The frantic Key Resolve and Foal Eagle joint military exercises being staged by the South Korean warmongers together with the US in the land, air and seas of South Korea ... are open acts of aggression against the DPRK and a vivid expression of wanton violation of all the agreements on nonaggression reached between the North and the South."

The North added that "nuclear war may break out right now" as relations with its neighbour have gone beyond "repair."