North Korea fired dozens of artillery shells onto a South Korean island on Tuesday, killing one person and triggering an exchange of fire as southern armed forces went on their highest state of alert.
In what appeared to be one of the most serious border incidents since the 1950-53 war, South Korea's government convened in an underground war room and air force jets were reportedly scrambled to the Yellow Sea island.
The firing came after North Korea's disclosure of an apparently operational uranium enrichment programme - a second potential way of building a nuclear bomb - which is causing serious alarm for the United States and its allies.
Some 50 North Korean shells landed on the South Korean border island of Yeonpyeong near the tense Yellow Sea border, damaging dozens of houses and sending plumes of thick smoke into the air, YTN television reported.
One South Korean Marine - part of a contingent based permanently on Yeonpyeong island - was killed, the military said.
The military said 13 Marines were injured and YTN said two civilians were also hurt.
"A North Korean artillery unit staged an illegal firing provocation at 2:34 pm (0534 GMT) and South Korean troops fired back immediately in self-defence," a ministry spokesman told AFP.
"A Class-A military alert issued for battle situations has been imposed immediately," the spokesman said.
One island resident, Lee Jong-Sik, told YTN: "At least 10 houses are burning. I can't see clearly for the smoke. The hillsides are also on fire.
"We were told by loudspeakers to flee our homes."
Yeonpyeong lies just south of the border declared by United Nations forces after the inconclusive war six decades ago, but north of the sea border declared by Pyongyang.
The Yellow Sea border was the scene of deadly naval clashes in 1999, 2002 and last November.
Tensions have been acute since the sinking of a South Korean warship in March, which Seoul says was the result of a North Korean torpedo attack. Pyongyang has angrily rejected the charge.
In late October, North and South Korean troops exchanged fire across their Cold War border, coinciding with a state of high alert for the South's military in the buildup to the G20 summit of world leaders in Seoul earlier this month.
South Korean President Lee Myung-Bak convened an emergency security meeting in response to the latest incident, a presidential spokesman said.
"He is now in an underground war room to discuss possible responses with ministers of related agencies and national security advisers," the spokesman told AFP.
Lee urged the officials to "handle it (the situation) well to prevent further escalation",
the spokesman said.
The firing comes after Kim Jong-Un, the little-known youngest son of Kim Jong-Il, was officially recognised as number two in North Korea's political system, clouding outsiders' view of its military and nuclear intentions.
The new crisis erupted as a US special envoy headed to China Tuesday to seek its help in curbing North Korea's new nuclear project, revealed to US experts who described a sophisticated programme to enrich uranium.
Stephen Bosworth has also visited South Korea and Japan this week to discuss the disclosure, which US officials say would allow the isolated North to build new atomic bombs.
Bosworth, speaking in Tokyo, ruled out a resumption of stalled six-nation talks - aimed at disarming the North of nuclear weaponry in return for aid and other concessions - while work continues on the enrichment programme.
China chairs the talks and is also the North's sole major ally and economic prop. It has come under pressure to play a leading role in resolving the latest nuclear dispute.
China appealed for the six-party talks to resume after the new revelations, and expressed concern over Tuesday's cross-border firing.
"We have taken note of the relevant report and we express concern over the situation," foreign ministry spokesman Hong Lei told reporters.
"We hope the relevant parties do more to contribute to peace and stability on the Korean peninsula," he said. Russia also warned against an escalation of tensions on the peninsula.