Seoul (AFP) - The highest-level talks between North and South Korea in nearly a year continued past midnight Saturday as the two sides sought to wind down an escalating crisis that pushed them to the brink of armed conflict.

With their respective armies still on maximum alert, top officials from both sides were still locked in discussions after more than six hours in the border truce village of Panmunjom, where the 1950-53 Korean War ceasefire was signed.

The talks had begun shortly after a North Korean deadline expired for Seoul to halt loudspeaker propaganda broadcasts across the border or face military action.

Despite scepticism that Pyongyang would follow through on its threat, the ultimatum raised tensions to their highest level for years, with the North re-positioning artillery units and South Korean and US fighter jets flying simulated bombing runs.

Thousands of South Korean civilians living on frontline border islands or near military propaganda units were evacuated from their homes to underground shelters as a preventive measure.

The talks in Panmunjom were led by South Korean national security adviser Kim Kwan-Jin and his North Korean counterpart Hwang Pyong-So -- a close confidante of leader Kim Jong-Un.