Some 4,500 South Korean troops aboard more than 20 ships and submarines as well as about 50 aircraft were mobilized to take part in the five days of naval exercises off the west coast, including spots near the two Koreas' maritime border, the Joint Chiefs of Staff said.
North Korea called the drills a military provocation that threatened to re-ignite war on the Korean peninsula.
"If the puppet warmongers dare ignite a war, (North Korea) will mercilessly destroy the provokers and their stronghold by mobilizing most powerful war tactics and offensive means beyond imagination," the ruling Committee for the Peaceful Reunification of the Fatherland said in a statement carried by North Korea's official Korean Central News Agency.
KCNA reiterated the committee's message in a separate report later Thursday, warning North Korea will retaliate at "even the slightest sign of attack."
Soldiers aboard the 14,000-ton ROK Dokdo, an amphibious landing ship, patrolled the deck as Lynx helicopters dropped sonar devices into the sea in search of enemy submarines. A 1,200-ton frigate remained on standby, ready to bomb the target.
The fleet dispatched for the exercises also include three 1,800-ton submarines, a 4,500-ton destroyer, and some 50 fighter jets, Cmdr. Won Hyung-sik of the Joint Chiefs of Staff said in Seoul.
The drills come just weeks after South Korea's joint military exercises with the U.S. off the east coast - maneuvers held in response to the deadly March sinking of the Cheonan warship, which killed 46 South Korean sailors.
A five-nation team of investigators concluded in May that a North Korean torpedo fired from a submarine sank the 1,200-ton Cheonan as the warship carried out routine surveillance. North Korea denied sinking the ship.
The waters off the west coast have been the site of several naval clashes between the two Koreas. The three-year Korean War ended in an armistice in 1953, but North Korea disputes the western maritime border unilaterally drawn by the United Nations.
North and South have engaged in three bloody battles near the line, most recently in November 2009, and the Cheonan went down in March not too far from the border.
Pyongyang warned earlier in the week it would "counter the reckless naval firing projected by the group of traitors with strong physical retaliation" and advised civilian ships to stay away from the maritime border.
The North also threatened to respond to last month's South Korea-U.S. military exercises with "nuclear deterrence" but South Korean military officials said there was no sign of unusual North Korean military activity.
North Korea routinely issues such threats, especially when the South holds joint military drills with the U.S. Pyongyang sees the exercises as a rehearsal for an invasion. The U.S. has 28,500 troops in South Korea to protect the longtime Asian ally.
South Korea was closely monitoring North Korea's military but spotted no unusual activity Thursday, the Joint Chiefs of Staff said.
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Associated Press writers Kwang-tae Kim and Sangwon Yoon contributed to this report from Seoul, South Korea.
