As South Korea continues to stage its military exercises, North Korea says it is prepared to respond with a nuke-fuelled “sacred war.”

­The North's Defense Minister Kim Yong Chun said his country was prepared to use its nuclear deterrent against the South “to counter the enemy's intentional drive.” His statement was reported by the country’s state media and comes after a short-term lull in reaction.

The minister accused Seoul of deliberately stoking tension by staging successive joint military drills with the US next to the North's territory.

He said the latest exercise, which involved heavy military machinery, fighter jets, missile launchers and hundreds of troops was an outright preparation for an attack against Pyongyang.

The drill came in the wake of a recent cross-border artillery exchange that killed four South Koreans. Thursday’s exercise was held kilometers from the border with the North despite its warning of retaliation.

“South Korea certainly seized on any opportunity it can to escalate tensions,” said foreign policy analyst Stephen Gowans, who claimed the sinking of the South Korean navy ship in March and the artillery exchange were part of the South’s intended provocation.

“You consider President Lee’s hostility toward North Korea, his policy of confrontation, the escalating war games. And it is hard not to conclude that South Korea is trying to precipitate a fight,” Gowans added.

Amid continued escalation of tension, the possibility of a rash move from either side poses the greatest danger, said Glyn Ford, former EU parliament member and author of North Korea on the Brink: Struggle for Survival.

“I don’t think anyone is intending to start a full-scale war at this point,” Ford said. “But the danger with escalation is it gets out of control and that is obviously something we need to be concerned with for the future.”

If military conflict does erupt, however, the stakes would be high for a number of nations, said Aleksandr Vorontsov from the Institute of Oriental Studies.

“It would be a nightmare for many countries… and first of all it would be a nightmare for the six countries who met for six-party talks [North Korea, South Korea, China, the US, Japan and Russia].”