Image caption North Korea is making 'rapid progress' on a major upgrade to its rocket launch site

Satellite images show that a ''major upgrade'' is underway at North Korea's rocket launch site, says a United States institute.

Work at the Musudan-ri site showed "rapid progress" since mid-2011, the analysis said.

The report came as Pyongyang accused Washington of trying to ''incite confrontation'' over speculation it may carry out a third nuclear test.

North Korea ''never envisaged'' such an act, said a foreign ministry spokesman.

The remarks followed a US warning that a nuclear test would lead to a "swift and sure response" from the region.

Glyn Davis, the US special envoy for North Korea policies, said on Monday that any such move by Pyongyang would be "a serious miscalculation".

Construction 'pace'

The satellite images, taken on 29 April of the Tonghae Satellite Launching Ground (also known as Musudan-ri) were analysed by the 38north website of the US-Korea institute at the Paul H. Nitze School of Advanced International Studies (SAIS) at Johns Hopkins University.

Citing fast progress on upgrading work, the analysis said: ''At the current pace of construction, the facilities should be operational by 2016-17.''

Image caption North Korea tried to launch a rocket last month but failed to do so

It also noted similarities between the North Korean buildings and those at Iran's Semnan Missile and Space Center.

''Nevertheless, while the two countries have a long history of missile co-operation, it is too soon to tell whether that co-operation extends to the design and construction of this facility or the new long-range liquid-fuelled rocket,'' it added.

Pyongyang's missile and nuclear ambitions faced increased scrutiny in recent months, following the death of Kim Jong-il last December and installation of his son Kim Jong-un.

In the wake of North Korea's failed rocket launch last month, South Korea also reported that preparations for a third nuclear test appeared to be under way.

In a statement on Tuesday, North Korea hit out at US comments on the possible test, saying the country had told the US that it was ''restraining'' itself.

''From the beginning, we did not envisage such a military measure as a nuclear test as we planned to launch a scientific and technical satellite for peaceful purposes,'' the ministry spokesman said in a statement carried by KCNA news agency.

There was still room for ''dialogue and negotiation'' to resolve ''the nuclear issue of the Korean Peninsula'', the spokesman added, but this could not happen unless the US ''rolls up its hostile policy'' towards North Korea.

''If the US persists in its moves to ratchet up sanctions and pressure upon us despite our peace-loving efforts, we will be left with no option but to take counter-measures for self-defence,'' the spokesman said.

The US Department of State declined to comment on the 38north analysis, but responded briefly to North Korea's statement.

"We're going to be guided not by what they say, but what they do," spokeswoman Victoria Nuland said at a press briefing.