South Korea's military has warned that it will retaliate "strongly and sternly" if the North launches "provocative attacks" during its ongoing military drill.

The South Korean warning comes a day after the North threatened to violate the 1953 truce over proposed new UN sanctions which seek to impose curbs on diplomats and cash transfers.

In a strongly-worded statement, the South Korean military said it would punish North Korea and its leadership if it decides to carry out attacks or indulges in provocative acts.

Tensions are running high in the Korean peninsula after the 12 February nuclear test by North Korea and military drills by both sides have further raised temperatures.

"The North had already received notice that South Korea-US drills are defensive in nature. If North Korea goes ahead with provocations and threatens the lives and safety of South Koreans, our military will strongly and sternly retaliate against the command and its supporting forces. We want to make it clear that (our military) has made all preparations to do that," said the military statement read out by senior official Kim Yong-hyun during a press conference.

South Korea and the US have been conducting a joint military exercise codenamed Foal Eagle since 1 March which is likely to go on till the end of April. Computer-simulated drills are expected to take place between 11 and 21 March.

Out of the 28,000 American troops stationed in South Korea, close to 10,000 are to take part in the ongoing drill along with 200,000 South Korean forces.

The South has also stepped up its security following the latest developments and the military has been kept on high alert, suggest reports.

"South Korea and the US have stepped up their surveillance assets to closely monitor North Korea's military. Troops have been placed on high alert," a South Korean official told the Yonhap news agency.

North Korea has already started a submarine drill and its military exercise is expected to take place in the coming week coinciding with the US-South Korea drill, according to reports.