The high-seas gun battle lasted only 10 minutes but shattered a fragile peace in the Yellow Sea, which has not seen a full-blown naval confrontation since the 1950-53 Korean War. As China, Japan and the United States called for calm, South Korea put its military on highest alert. North Korea said the neighbours were on the brink of war.
According to South Korea's Defence Ministry, four North Korean patrol boats and three torpedo boats opened fire with 25mm cannon on Southern patrol boats in a contested sea area between the North Korean mainland and five South Korean islands about 100 kilometres (60 miles) northwest of Seoul.
Some of the eight South Korean warships in the area returned fire, sinking one North Korean torpedo boat and damaging up to five others, including a 420-tonne patrol boat. Damage to South Korean vessels was minimal.
North Korea's state-run Korean Central News Agency accused the South of provoking the incident after a week-long stand-off in the disputed area, which is divided by a UN-drawn sea boundary that Pyongyang refuses to recognise.
The agency confirmed that one of its vessels had been sunk, said three others were damaged and accused South Korea of "reckless military provocations'' aimed "at driving the situation of the Korean peninsula to the brink of war''. It also demanded an apology.
North and South Korea have been living under an uneasy truce since the end of the Korean war. The last serious incident between the two was in December when South Korean forces sank a Northern spy vessel off the southern tip of the peninsula, killing the spy boat's crew.
In Seoul, Hwang Won-tak, senior secretary to the president for foreign policy and national security, said after an emergency meeting of the National Security Council that South Korea would "deal firmly'' with further intrusions.
But other South Korean officials emphasised that war had not broken out and said that long-delayed talks between Seoul and Pyongyang aimed at defusing tensions on the peninsula were still scheduled to start in Peking on Monday.
North Korea has been devastated by four years of famine. The nation of 22 million has been brought to its knees, raising fears that a desperate Pyongyang may force a war with Seoul. The talks are aimed at securing aid from South Korea and enabling reunions between families separated by the five-decade division of the peninsula.
In the United States, Mike Hammer, spokesman for the White House National Security Council, said the situation appeared to have calmed down by last night, with the North Korean boats retreating to the North.
The US has 37,000 troops in South Korea, and Mr Hammer said Washington was reaching out to the North Korean government "to make clear that they need to stay north of the limit line''.Reuse content