Image copyright AP Image caption The western sea border is a flashpoint - in this 2010 incident North Korean fire killed four South Koreans

North and South Korea have exchanged fire into the sea across the disputed western sea border, South Korea says.

North Korea announced early on Monday that it would hold live-fire drills in seven parts of the border area.

South Korea says it returned fire after North Korean shells landed in its territorial waters.

The area has been a flashpoint between the two Koreas. The UN drew the western border after the Korean War, but North Korea has never recognised it.

Analysis By unleashing its artillery batteries on the disputed maritime border, North Korea is directly challenging the South Korean military and testing its resolve. South Korea's west coast islands are much closer to the North than to the South Korean mainland and are vulnerable to attack. It is a war of nerves that has led to bloodshed in the past - and gives the North scope to flex its military muscle without igniting large scale conflict. South Korean has been found wanting in its response in previous contests - but this time it fired hundreds of shells into North Korean waters. It also scrambled fighter bombers with the unspoken warning that they could strike North Korean artillery units should any shells land on an island. The North's action is seen as a response to the current annual war drills taking place in the South - including the largest beach landings by American and South Korean marines for many years. The North had already responded by firing salvoes of rockets - and two medium range ballistic missiles - off its east coast. It is currently pushing for talks with the US and its allies and habitually uses displays of force to convince its adversaries that any attempt at confrontation will backfire.

In late 2010, four South Koreans were killed on a border island by North Korean artillery fire. Border fire was also briefly exchanged in August 2011.

'Responded with fire'

The live-fire exercises were announced by North Korea in a faxed message from its military to the South's navy.

South Korea warned of immediate retaliation if any shells crossed the border.

"Some of [North Korea's] shells landed south of the border during the drill. So our military fired back north of the border in line with ordinary protocol," a defence ministry statement said.

South Korea said the two sides exchanged hundreds of shells.

"The North fired some 500 shots... and some 100 of them landed in waters south of the border," said Defence Ministry spokesman Kim Min-seok.

The South fired more than 300 rounds in return, he said.

Residents of a border island, Baengnyeong, were evacuated into shelters during the three-hour incident.

In November 2010, North Korea fired shells at the border island of Yeonpyeong, killing two marines and two civilians.

It said it was responding to South Korean military exercises in the area.

Earlier that year, a South Korean warship sank near Baengnyeong island with the loss of 46 lives.

Seoul says Pyongyang torpedoed the vessel but North Korea denies any role in the incident.

'New form' test

China - North Korea's biggest trading partner - called for calm and restraint after the exchange of fire.

It came days after North Korea test-fired two medium-range Nodong missiles over the sea, its first such launch since 2009.

Media playback is unsupported on your device Media caption On Monday a joint S Korea-US military drill also took place

Late last week, the UN Security Council condemned the launch and said it was considering an "appropriate response".

That launch followed a series of short-range missile tests, seen as a response to the current US-South Korea annual military exercises.

Over the weekend, North Korea also threatened to conduct a "new form" of nuclear test.

It has conducted three nuclear tests to date, the most recent in February 2013.

South Korea's Unification Ministry said on Monday that there was no sign a North Korean nuclear test was imminent.