North Korea put its armed forces on standby Monday and threatened "a war" if anyone tries to shoot down what regional powers suspect is an imminent test-firing of a long-range missile.
Pyongyang also cut off a military hot line with the South, causing a complete shutdown of their border and stranding hundreds of South Koreans working in an industrial zone in the North Korean border city of Kaesong.
Monday's warning — the latest barrage of threats from the communist regime — came as U.S. and South Korean troops kicked off annual war games across the South, exercises the North has condemned as preparation for an invasion. Pyongyang last week threatened South Korean passenger planes flying near its airspace during the drills.
Analysts say the regime is trying to grab President Barack Obama's attention as his administration formulates its North Korea policy.
The North also indicated it was pushing ahead with plans to send a communications satellite into space, a provocative launch neighboring governments believe could be a cover for a long-range missile capable of reaching Alaska.
U.S. and Japanese officials have suggested they could shoot down a North Korean missile if necessary, further incensing Pyongyang.
"Shooting our satellite for peaceful purposes will precisely mean a war," the general staff of the North's military said in a statement carried Monday by the official Korean Central News Agency.
Any interception will draw "a just retaliatory strike operation not only against all the interceptor means involved but against the strongholds" of the U.S., Japan and South Korea, it said.
The North has ordered military personnel "fully combat ready," KCNA said in a separate dispatch.
Obama's special envoy on North Korea again urged Pyongyang not to fire a missile, which he said would be an "extremely ill-advised" move.
"Whether they describe it as a satellite launch or something else makes no difference" since both would violate a U.N. Security Council resolution banning the North from ballistic activity, Stephen Bosworth told reporters after talks with his South Korean counterpart.
South Korea's Defense Ministry spokesman Won Tae-jae downplayed the North's threats as "rhetoric" but said the country's military was ready to deal with any contingencies.
Analysts say a satellite or missile launch could occur late this month or in early April when the North's new legislature, elected Sunday, is expected to convene its first session to confirm Kim Jong Il as leader.
Ties between the two Koreas have plunged since South Korean President Lee Myung-bak took office a year ago halting aid unless the North fulfills an international promise to dismantle its nuclear program.
In retaliation, North Korea suspended the reconciliation process and key joint projects with Seoul, and has stepped up the stream of belligerence toward the South.
Severing the military hot line for the duration of the 12-day joint U.S.-South Korean military exercises leaves the two Koreas without any means of communication at a time of heightened tensions.
The two Koreas use the hot line to exchange information about goods and people crossing into Kaesong. Its suspension halted traffic and stranded about 570 South Koreans who were working in Kaesong.
About 80 had planned to return to the South on Monday but were stuck there overnight since they cannot travel after nightfall. Earlier, some 700 South Koreans who intended to go to Kaesong on Monday were unable to cross the border, the Unification Ministry said.
All South Koreans in Kaesong are safe, the ministry said as it called on Pyongyang to restore the hot line immediately.
The two Koreas technically remain in a state of war since their three-year conflict ended in a cease-fire, not a peace treaty, in 1953. Hundreds of thousands of troops are amassed on each side of the Demilitarized Zone separating the two Koreas, making the Korean border one of the world's most heavily armed.
The United States, which has 28,5000 troops in South Korea, routinely holds military exercises with the South. Pyongyang routinely condemns them as rehearsals for invasion despite assurances from Seoul and Washington that the drills are defensive.
The exercises, which will involve some 26,000 U.S. troops, an unspecified number of South Korean soldiers and a U.S. aircraft carrier, are "not tied in any way to any political or real world event," Gen. Walter Sharp, commander of the U.S. troops, said Monday.