The decision comes as Seoul and Tokyo are locked in a tit-for-tat trade and diplomatic dispute following a series of South Korean court rulings against Japanese firms, requiring them to pay for forced labour during World War II.

Japan had removed South Korea from a so-called white list of countries that receive preferential export treatments earlier this month "without presenting clear justifications", said Kim You-geun, a national security official at the presidential Blue House in Seoul.

He said Tokyo had done so citing security concerns and a loss of trust with South Korea, and that caused "significant change" in the nature of defence cooperation.

"In such a situation, we have determined it is not in the national interest to maintain the agreement that was signed for the purpose of exchanging sensitive military intelligence," he added.

The dispute between the two US allies has raised concerns over the potential implications for their security cooperation in the face of North Korean missile tests, and the possible impact on global supply chains.

The intelligence pact was signed in November 2016 with Washington's backing in response to North Korea's missile launches and nuclear tests to better coordinate the gathering of information about the reclusive state.