North Korea fired an artillery barrage near two South Korean border islands Friday, Seoul's defence ministry said, prompting a live-fire drill by the South's military.

Residents of the two islands were ordered to evacuate to shelters and ferries were suspended amid one of the most serious military escalations on the peninsula since Pyongyang fired shells at one of the islands in 2010.

North Korea's military said it had conducted a naval live-fire drill as a "natural countermeasure" against South Korean threats, according to a statement on the official Korean Central News Agency.

Seoul's defence ministry said the rival military fired more than 200 rounds of artillery shells near Yeonpyeong and Baengnyeong, two sparsely populated islands situated just south of a defacto maritime border between the two sides.

It said the shells landed in a buffer zone created under a 2018 tension-reducing deal, which fell apart in November after the North launched a spy satellite.

Resuming artillery fire in the buffer zone "is a provocative act that threatens peace on the Korean Peninsula and escalates tensions", Seoul's defence minister Shin Won-sik said.

In response, Seoul's military will take "immediate, strong, and final retaliation — we must back peace with overwhelming force", he added.

North Korea's military warned Seoul should not commit "a provocation under the pretext of so-called counteraction", according to KCNA. It threatened the North would "show tough counteraction on an unprecedented level". 

It said the shells fired did not even have "an indirect effect" on Baengnyeong and Yeonpyeong.

Pyongyang's major ally and benefactor China called for "restraint" from all sides.

Evacuation orders

Yeonpyeong, which has around 2,000 residents, is about 115 kilometres (70 miles) west of Seoul. Baengnyeong, with a population of 4,900, is about 210 kilometres west of Seoul.

Local officials said residents had been told to evacuate to shelters as a "preventative measure" ahead of the South Korean military drill. The order was lifted hours later, South Korea's Yonhap news agency reported.

One resident of the island said they were "shaking in fear" at the barrage.

"At first I thought it was the shells fired by our own military… but was told later it was by North Korea," Kim Jin-soo, a Baengnyeong resident told local broadcaster YTN.

In November, Seoul partially suspended the 2018 military accord to protest Pyongyang's putting a spy satellite into orbit. The North then scrapped the deal completely.

"The nullification of the (accord) increases the possibility of military clashes in the border areas," Yang Moo-jin, president of the University of North Korean Studies in Seoul, told AFP.

He added that "the evacuation of our residents raises psychological and security concerns, which can ultimately destabilise the economy of South Korea".

2010 clash

In 2010, in response to a South Korean live-fire drill near the sea border, the North bombarded Yeonpyeong island killing four South Koreans — two soldiers and two civilians.

That was the first attack on a civilian area since the 1950-53 Korean War.

South Korea returned fire an exchange which lastedmore than an hour, as the two sides traded more than 200 shells, sparking brief fears of a full-fledged war.

Relations between the two Koreas are at one of their lowest points in decades, after the North's leader Kim Jong-Un enshrined the country's status as a nuclear power into the constitution while test-firing several advanced inter-continental ballistic missiles.

At year-end policy meetings, Kim warned of a nuclear attack on the South and called for a build-up of the country's military arsenal, warning that conflict could "break out any time".

To deter Pyongyang, the United States deployed a nuclear-powered submarine in the South Korean port city of Busan and flew long-range bombers in drills with the South and Japan.

North Korea described the deployments as "intentional nuclear war provocative moves".

On Friday, KCNA said Kim called for the ramping-up of missile launcher production "given the prevailing grave situation that requires the country to be more firmly prepared for a military showdown with the enemy."

His comments came after the White House accused North Korea of providing Russia with ballistic missiles and missile launchers that were used in recent attacks on Ukraine. Washingon has called this a escalation of Pyongyang's support for Moscow.