South Korea and the US raised the military alert level for the Korean peninsula after the communist North warned the truce which ended the Korean War was dead.
North Korea ramped up tensions this week with a series of provocations rarely seen since the 1950-53 Korean War, including war threats, missile launches and a nuclear test that puts it closer to having an atomic bomb.
The joint command for the 28,500 US troops that support South Korea's 670,000 soldiers has now raised its alert a notch to signify 'a serious threat' from North Korea.
It is the highest threat level since the North's only other nuclear test in October 2006.
North Korea looks certain to face fresh sanctions for defying a UN resolution by testing a nuclear device for a second time, with a vote in the 15-nation UN Security Council expected next week.
It is thought the North's escalated activity might be partly aimed at firming leader Kim Jong-il's grip on power and helping him draw up succession plans in Asia's only communist dynasty after a suspected stroke in August raised questions over his rule.
Weapons experts point out that while North Korea is pushing hard to develop a nuclear arsenal, it does not have an effective way to attack with an atomic warhead or bomb.
UNSC powers have agreed in principle that North Korea must face sanctions, Western diplomats said on Wednesday.
Possible steps include a ban on importing and exporting all arms - not just heavy weapons - as well as asset freezes and travel bans for North Korean officials.
More North Koean firms may also be placed on UN blacklist.
The measures would expand on sanctions approved by the council after Pyongyang's 2006 nuclear test, penalties that have been widely ignored and left unenforced.
