North Korea threatened on Saturday to respond with nuclear weapons to a major US-South Korean naval exercise starting this weekend, saying it was ready for a "retaliatory sacred war".

The threat came from the powerful National Defence Commission (NDC), chaired by leader Kim Jong-Il, as tensions grew over the sinking of a South Korean warship which Seoul and Washington blame on Pyongyang.

The North routinely threatens war in response to joint military exercises by the two long-time allies, calling them a rehearsal for war.

But tensions have been high for the past two months, since the US and South Korea accused the North of torpedoing the warship with the loss of 46 lives.

The North denies involvement and says the "smear campaign" is a pretext for aggression.