Defense ministry spokesman Shin Hyun-Don, responding to a local media report, said work had been going on at the tunnel in Kilchu, North Hamkyong Province, since the late 1990s.

"US and South Korean authorities have detected signs of a tunnel being drilled in Kilchu while constantly monitoring it, but it is unclear what the tunnel is for," Shin said.

Defense Minister Yoon Kwang-Ung also said: "We've not yet seen any signs (of a nuclear test)."

The Chosun Ilbo newspaper on Tuesday quoted an unnamed South Korean official as saying that US intelligence suggested North Korea could conduct an underground nuclear test at the site, 350 kilometers (217 miles) northeast of the capital Pyongyang.

"US spy satellites have spotted trucks moving briskly and cranes or other equipment stationed at a place in Kilchu in North Hamkyong Province," said the Chosun Ilbo, the biggest circulation daily in South Korea.

"Synthesizing satellite photos and other information, US intelligence authorities concluded North Korea may be preparing a nuclear test in the area and conveyed related photos and analyses to our intelligence authorities."

Deputy Foreign Minister Song Min-Soon, South Korea's top negotiator to six-way talks aimed at ending the North's nuclear ambitions, on Monday denied Seoul had received any intelligence from Washington about such a test.

A series of media reports have said that the North has been preparing an underground nuclear test since March and might conduct one as early as June.

The reports follow North Korea's announcement in February that it was pulling out of the six-way talks on its nuclear drive and was already nuclear-armed.

The six-nation talks, which include the two Koreas, Russia, Japan, the United States and China, have been stalled for nearly a year since a third round of negotiations in June last year.

The North is believed to have one or two crude nuclear bombs, according to US intelligence reports.

International jitters were heightened on Sunday when North Korea test-fired a short-range missile, although US, South Korean and Japanese officials refused to link the incident to Pyongyang's drive for nuclear arms.

In September, two massive blasts in northeast North Korea raised fears of a nuclear test, but foreign diplomats were later taken to the site and told the explosions were part of a project to build a hydro-electric power plant.

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