South Korea pressed ahead with a live-fire military exercise on Monday but North Korea said it would not retaliate and, instead, "agreed" to allow U.N. nuclear inspectors to return in a surprise move.
Amid tensions on the divided Korean peninsula, the U.N. Security Council held an emergency meeting on Sunday but the major powers failed to agree on a statement to defuse the crisis triggered by North Korea's Nov. 23 deadly attack on an island in the South.
Air-raid bunkers on Yeonpyeong island shook during South Korea's 90-minute artillery exercise but North Korean guns stayed silent, reports from the scene said.
The last time the South conducted firing drills from Yeonpyeong, the North retaliated by shelling the island, killing four people, in the worst attack on South Korean territory since the Korean war ended in 1953.
"It's a perfectly natural thing for a sovereign nation and a divided country to conduct military exercises to defend its territory in the face of military conflict," South Korean President Lee Myung-bak said in a statement.
He ordered all government officials on emergency standby, as the South's close ally the United States stood by Seoul's right to self-defense.
The North disputes the Yellow Sea border drawn by United Nations forces after the Korean War. It claims the waters around Yeonpyeong as its own.
As the South test-fired artillery, North Korea's military said it would not respond and accused Seoul of deliberately stoking tensions.
"The revolutionary armed forces of the DPRK (North Korea) did not feel any need to retaliate against every despicable military provocation, like one taking revenge after facing a blow," the North's military supreme command said in a statement carried by the KCNA news agency.
It argued that the "U.S. imperialists and the South Korean puppet military warmongers perpetrated such reckless military provocation," referring to the drills.
"The world should properly know who is the true champion of peace and who is the real provocateur of a war," the statement said.
Pyongyang had earlier threatened another attack on the southern neighbor that would be "deadlier... in terms of the powerfulness and sphere of the strike" if the latest drill went ahead.
UN meeting deadlocked
South Korea's exercise came hours after the U.N. Security Council ended its emergency meeting in New York in a deadlock, with Russia and China resisting an explicit condemnation of the North for last month's attack.
"The gaps that remain are unlikely to be bridged," said Susan Rice, the U.S. ambassador to the U.N.
China fended off Western demands at the meeting that its ally North Korea be publicly condemned for last month's artillery assault, diplomats said.
Russia, which called the Security Council meeting to try to prevent an escalation, warned that the international community was now left without "a game plan" to counter escalating tensions.
Other council diplomats, however, said it was possible the council could return to the issue as early as Monday.
Western diplomats said China and Russia were pushing for an ambiguous statement that would not have blamed North Korea for the crisis, but would have called on both sides to exercise restraint.
Rice said the "vast majority" of council members did not want an ambiguous statement.
There were signs of optimism however.
North Korea told visiting U.S. troubleshooter Bill Richardson that it would accept the resumption of international inspections of its nuclear weapons program.
New Mexico Governor Richardson, visiting Pyongyang to try to ease tensions, won agreement from North Korea to allow U.N. nuclear inspectors to return, according to CNN which has a team traveling with him.
Pyongyang "agreed to allow International Atomic Energy Agency personnel to return to a nuclear facility in the country and agreed to negotiate the sale of 12,000 ... fuel rods and ship them to an outside country, presumably to South Korea", CNN said, quoting a correspondent in Pyongyang.
"The North has also agreed to consider Richardson's proposal for a military commission between the United States, North Korea and South Korea as well as a separate hotline for the Koreas' militaries."
Reported by RFA's Korean service and news agencies. Written in English by Parameswaran Ponnudurai.