North Korea has announced that it will sever the only channel of communication it has with the United States and hinted at harsher punishments for American detainees in the country, in retaliation to Washington's decision to blacklist leader Kim Jong-un for human rights abuses.

On Monday, the North Korean state media said Pyongyang had told the US that it would terminate contact through a United Nations channel in New York that allowed diplomats to communicate.

The two countries do not have diplomatic ties and their animosities have deepened because of the North's nuclear and missile programmes.

In Washington, State Department spokesman John Kirby did not directly address the fate of the New York channel.

In comments to reporters, Kirby called on North Korea "to refrain from actions and rhetoric that only further raise tensions in the region", but said he would not comment on the details of diplomatic exchanges.

North Korea also said it had informed Washington that it will handle all issues between the two countries, including American detainees, according to an unspecified "wartime law", the state-run Korean Central News Agency (KNCA) said.

"As the United States will not accept our demand for the immediate withdrawal of the sanctions measure, we will be taking corresponding actions in steps," KCNA said.

North Korea had already been sanctioned because of its nuclear weapons programme, but it was the first time that Kim has been personally sanctioned. The North called the sanctions tantamount to a declaration of war.

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The move was the latest escalation of tension with the isolated country, which earlier on Monday threatened a "physical response" after the United States and South Korea said they would deploy the THAAD missile defence system in South Korea.

THAAD refers to the Terminal High Altitude Area Defence anti-missile system that will be used to counter North Korea's growing nuclear and ballistic missile capabilities.

"As the United States will not accept our demand for the immediate withdrawal of the sanctions measure, we will be taking corresponding actions in steps," KCNA said.

"The Republic will handle all matters arising between us and the United States from now on under our wartime laws, and the matters of Americans detained are no exception to this," it added.

'Technically at war'

South Korean media have suggested that North Korea might use the wartime law to hand out harsher punishments on Americans detained in the North.

The North's actions could complicate US efforts to secure the release of at least two American citizens being held for alleged espionage, subversion and other anti-state activities. One is serving a 10-year prison term with hard labour, while the other received 15 years.

North Korea and the US remain technically at war because of the 1950-53 Korean War, in which Washington sided with the South.

The UN channel has been an intermittent point of contact between the North and the US to exchange messages and, less frequently, to hold discussions.

North Korea said last week that it was planning its toughest response to what it deemed a "declaration of war" by the US after it sanctioned Kim.

On Saturday, the North test-fired a ballistic missile from a submarine, but it appeared to have failed after launch.

Meanwhile, North Korea's closest ally, Beijing, has also condemned the decision to deploy the THAAD system.

Chinese Foreign Minister Wang Yi said on Saturday that THAAD exceeded the security needs of the Korean peninsula, and suggested there was a "conspiracy behind this move".

The move to deploy the THAAD system also drew a swift and sharp protest from China.

The US is a close ally of South Korea, maintaining 28,500 troops in South Korea, a legacy of the Korean War.