The South's Defence Minister Kim Tae-Young said that troops had been ordered to launch a powerful counter-attack if North Korea were to fire shells into Seoul-controlled waters.

Previous guidelines required South Korean troops to issue warnings three times before opening fire.

The order was in line with new combat policy for South Korean troops guarding the volatile sea border, Kim told a parliamentary defence committee.

The North fired an artillery barrage into disputed inter-Korean waters in the Yellow Sea on August 9.

Military officials said most of the shells landed on the northern side of the borderline, but some fell on the southern side. South Korea did not fire back.

Tensions have run high between the two since Seoul accused Pyongyang of torpedoing a South Korean corvette in March with the loss of 46 sailors. North Korea vehemently denies involvement.

The South has been carrying out a series of military exercises, jointly with the United States or alone, as a show of force against the North.

News reports in South Korea say the country has been practising a new war plan during the current Ulchi Freedom Guardian (UFG) exercise that envisions occupying and stabilising its impoverished communist neighbour.

The August 16-26 UFG exercise involves 56,000 South Korean and 30,000 US troops, as well as an unspecified number of American soldiers based in the United States who link up by computer.

It envisions a powerful counter-offensive up to the Chongchon river, some 80 kilometres (48 miles) north of Pyongyang, in case of aggression from the North, the Dong-A Ilbo newspaper reported.

The daily quoted an unidentified military official as saying the South's unification ministry was also practising a "stabilisation" programme aimed at turning North Koreans into South Korean citizens.

Past UFG exercises practised restoring administration in occupied North Korean areas, but this year's drill goes a step further, it said.

"Various drills designed for different circumstances are being conducted," unification ministry spokeswoman Lee Jong-Joo told AFP, without elaborating.

Top Chinese nuclear envoy Wu Dawei will visit Seoul on Thursday after making a trip to Pyongyang last week for discussions on how to resume talks on dismantling the North's nuclear programme.

The North quit six-party talks, also involving South Korea, the United States, China, Russia and Japan, in April 2009 in protest at UN condemnation of an apparent long-range missile test.

It carried out its second nuclear test the following month, sparking tougher UN sanctions.

Meanwhile, the South's defence ministry said a large number of North Korean soldiers, armoured vehicles and artillery have been stationed near Pyongyang. The deployment, which began on July 12, appears to be related to political events such as a meeting of key communist party delegates next month and the party's 65th anniversary on October 10, it said.

North Korean leader Kim Jong-Il has not publicly appointed an eventual successor, but his youngest son, Kim Jong-Un, is widely seen as being groomed to take over from his ailing 68-year-old father.

Some analysts say Kim Jong-Il will probably designate the son as his political heir at the September meeting, the third such gathering since the communist state was founded in 1948.

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