The North has followed up its May 25 test by firing a volley of short-range missiles, renouncing the truce on the Korean peninsula and threatening possible attacks on the South.

It is also said to be preparing to test medium-range missiles and a long-range Taepodong-2.

Analysts believe ailing leader Kim Jong-Il, 67, is trying to bolster his authority so he can put in place a succession plan reportedly involving his third son Kim Jong-Un.

Steinberg, leading a delegation to discuss next steps after the nuclear test, held talks with Vice Foreign Minister Kwon Jong-Rak and later lunched with Foreign Minister Yu Myung-Hwan.

"We discussed the need to work together very closely in the event of any contingencies," he said after meeting Kwon, when asked about the succession report.

South Korea and the US "share the same assessment of the dangers that we face by the developments in North Korea's missile and nuclear programmes," he said.

Steinberg arrived from Japan and will go on to China, which hosts six-party talks on North Korea's nuclear disarmament. The talks also include the two Koreas, Japan, the US and Russia.

After the UN Security Council censured its April 5 rocket launch, the North announced it was quitting the talks and restarting a programme to make weapons-grade plutonium.

"I think we have a common view that we need to take steps to make clear to North Korea that the path it's on is the wrong one," said Steinberg, whose team includes Treasury Undersecretary Stuart Levey.

Diplomats from the five permanent Security Council members plus Japan and South Korea are negotiating in New York about a resolution which could include new financial and other sanctions.

Asked about possible fiscal curbs, Steinberg said diplomats were discussing a range of options. "I don't want rule in or rule out specifics right now."

Reports that Kim has picked his successor came as South Korean and US forces maintained a heightened alert along the tense land and sea border.

South Korea Tuesday sent a high-speed navy patrol boat armed with guided missiles and vowed to "punish" any attacking forces.

The North is reported to have stepped up naval drills near the western sea border, the site of deadly skirmishes between the two Koreas in 1999 and 2002.

Pyongyang has warned of "self-defence measures" in response to any tougher UN sanctions.

US and South Korean officials say the North appears to be preparing to test-fire a long-range Taepodong-2 missile capable in theory of reaching Alaska.

South Korea's Yonhap news agency has reported that the North also seems to be preparing to test-fire several medium-range missiles from its southeast coast.

"Dear Leader" Kim is widely reported to have suffered a stroke last August. He has resumed an active round of inspection visits but official photos show him looking noticeably older and more gaunt.

South Korea's intelligence services have received word that Kim has nominated 26-year-old Jong-Un to succeed him, a South Korean lawmaker briefed by intelligence officials said Tuesday.

US forces in South Korea will deploy unmanned spy planes to keep closer watch over the North amid the mounting tensions, the deputy head of US forces in the South says.

Lieutenant General Jeffrey Remington said decades-old U-2 spy planes would be replaced with Global Hawk unmanned reconnaissance planes.

Remington's comments in an interview with Dong-A Ilbo newspaper were confirmed by his public affairs officer.

All rights reserved. © 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.