The North also announced it would expel all South Koreans working at a joint factory park in the northern border town of Kaesong, the official Korean Central News Agency said in a dispatch monitored in Seoul late Tuesday.
Tensions were rising on the divided Korean peninsula in the wake of an investigation report blaming North Korea for a torpedo attack that sank the Cheonan warship on March 26, killing 46 South Korean sailors.
South Korea's military restarted psychological warfare operations - including blaring radio broadcasts into the North and placing loudspeakers at the border to blast out propaganda - to punish the North for the provocation. The South is also slashing trade and denying permission to North Korean cargo ships to pass through South Korean waters.
North Korea struck back by declaring it would cut all ties with the South until President Lee Myung-bak leaves office. South Korean ships and airliners will be banned from passing through its territory and the North will resume its own psychological warfare, KCNA said.
Earlier, one Seoul-based monitoring agency reported that North Korea's leader ordered its 1.2 million-member military to get ready for combat. South Korean officials could not immediately confirm the report.
The North flatly denies involvement in the sinking of the Cheonan, one of the South's worst military disasters since the 1950-53 Korean War ended with an armistice, and has warned that retaliation would mean war. It has threatened to destroy any propaganda facilities installed at the heavily militarized border.
A team of international investigators, however, concluded last week that a torpedo from a North Korean submarine tore apart the Cheonan.
