South Korea has reached a deal to buy precision-guided missiles from an Israeli company to protect islands near the tense sea border with North Korea, a report said Tuesday.

Yonhap news agency said about 50 Israeli missiles would be deployed on two islands in the Yellow Sea, probably late next year.

"A deal was reached recently to bring in Spike NLOS missiles developed by Israel," a military source was quoted as saying.

The defence ministry refused to confirm the report.

The missile developed by Israel's Rafael Advanced Defense System uses global positioning system (GPS) technology and is capable of hitting North Korean artillery hidden in mountain caves, Yonhap said.

The Spike NLOS, which costs $300,000 per unit, has a range of 25 kilometres (15 miles), it said.

The disputed Yellow Sea border has been a persistent flashpoint. The North shelled a South Korean island last November, killing four people and briefly sparking fears of war.

Since then South Korea has deployed additional troops and weapons on the islands.