South Korean and US defence officials said Sunday they would begin formal talks on the deployment on the Korean peninsula of a US missile defence system to counter the growing threat from North Korea.

The announcement followed a North Korean rocket launch which the US and its allies condemned as a covert ballistic missile test.

"It has been decided to formally start talks on the possibility of deploying the THAAD system to South Korea as part of steps to bolster the missile defence of the Korea-US alliance," said Yoo Jeh-Seung, the South's deputy defence minister for policy.

There has been speculation for years about the deployment of the Terminal High Altitude Area Defense (THAAD) system -- one of the most advanced in the world -- to the South, one of Washington's main Asian allies.

The US insists that it is a deterrent necessitated by the North's advancing ballistic missile programme, while China and Russia argue that it would undermine stability and could trigger an arms race in a delicately balanced region.

China said it was "deeply concerned" at the decision to begin official negotiations.

"When pursuing its own security, one country should not impair others' security interests," said foreign ministry spokesperson Hua Chunying, adding moves to advance the deployment would escalate tensions on the peninsula and damage regional peace and stability.

South Korea said there was no alternative.

"The Korea-US alliance had no choice but to take such a defence action because North Korea staged a strategic provocation and is refusing to have a genuine dialogue on denuclearisation," Yoo said in a joint briefing with Lieutenant General Thomas Vandal, commander of the US Eighth Army based in the South.

Vandal argued that it was "time to move forward" with the THAAD issue, saying there was "growing support" in the South for its deployment.

Pyongyang says any such move would be a Cold War tactic to "contain" China and Russia.

But Yoo stressed the THAAD system -- if deployed -- would "operate only regarding North Korea".

Speaking in response to the North's rocket launch, Kim Yong-Hyun, chief operations officer at the South's Joint Chiefs of Staff, told lawmakers Sunday the upcoming annual joint US-South Korea military exercises would be the largest yet held.

The Key Resolve and Foal Eagle exercises, to be staged in March and April this year, will boast the "most cutting-edge" technology, Kim said.

The South's military will also set up more loudspeakers along the border to broadcast propaganda programmes to the North in response to the rocket launch, he added.

Pyongyang has long criticised both the joint US-South Korea military exercises, which it claims are practice for an invasion, and the South's loudspeakers, which it has previously threatened to open fire on.

Seoul last month resumed its loudspeaker propaganda in response to Pyongyang's fourth nuclear test last month. Kim said the army would also extend broadcasting hours of the programmes, consisting of news and K-pop, in response to the rocket launch.