The South Korean government is investigating unconfirmed intelligence reports that a gun battle, leaving between 20 and 30 soldiers dead, broke out when the North Korean regime removed army chief Ri Yong-ho from office.

The Chosun Ilbo, a South Korean daily newspaper, reported that some intelligence analysts believe Mr Ri, who has not been seen since his abrupt sacking earlier this week, was injured or killed in the confrontation.

Citing South Korean government officials, it said the gun battle erupted when vice marshal Choe Ryong Hae, director of the People's Army General Political Bureau, tried to detain Mr Ri while carrying out North Korean leader Kim Jong-un's order to sack him.

Guards protecting Mr Ri, who was a vice marshal, apparently opened fire.

"We cannot rule out the possibility that Ri was injured or even killed in the firefight," one source said.

North Korea's state media said in a surprise announcement on Monday that Mr Ri, a close aide to Mr Kim, had been removed from all his posts due to "illness", sparking speculation he may have been purged amid a power struggle in the core of the Kim regime.

Meanwhile, North Korean soldiers in Pyongyang have celebrated leader Kim Jong-un's appointment as the head of the military with mass choreographed dancing.

Earlier this week, it was announced the country's young leader would become marshal of the nation's 1.2 million-strong armed forces.

State television shows hundreds of uniformed soldiers twirling, dancing and singing patriotic songs on the streets in celebration.

Kyodo/ABC