South Korea and the United States launched a new round of war games Monday involving tens of thousands of troops in a huge show of force against North Korea, which has threatened fiery retaliation.

The 10-day computerised exercise is the latest in a series being staged by the South -- either alone or with the United States -- after the sinking of one of its warships in March which sharply raised tensions on the peninsula.

President Lee Myung-Bak, who unveiled a roadmap for the reunification of the peninsula at the weekend, described the drill as an "exercise for peace and war deterrence".

The exercise, codenamed "Ulchi Freedom Guardian" after a renowned ancient Korean general, is aimed at intercepting mock North Korean attacks using nuclear weapons, missiles and submarines, military officials said.

The North's military threatened Sunday to "deal a merciless counter-blow" to the United States and South Korea and denounced the exercise as a rehearsal for a full-scale "military invasion".

Pyongyang is "ready to sweep away all enemies with its arsenal," Rodong Sinmun, the North's ruling party newspaper, said in an angry commentary Monday. "Those enjoying the fire are bound to be burned to death."

The exercise involves 56,000 South Korean and 30,000 US troops as well as an unspecified number of American soldiers based in the United States who will link up by computer, a spokesman for the South's Joint Chief of Staff told AFP.

"As a divided country, we need to work on the drill thoroughly, so that it will be more than just a routine exercise," President Lee was quoted by his spokesman as saying at a cabinet meeting held in an underground war room.

"Although this is a regular annual exercise, people may feel nervous about the drill, which takes place at a time when inter-Korean tension is high."

Lee said in a speech Sunday to celebrate Korea's liberation from Japanese colonial rule in 1945 that South Korea would not tolerate any further military provocations by its reclusive communist neighbour.

The Koreas "need to overcome the current state of division and proceed with the goal of peaceful reunification," he said.

Tensions have been running high since the March sinking of the Cheonan with the loss of 46 lives, with a multinational inquiry determining that it was caused by a North Korean torpedo.

Pyongyang has vehemently denied it was involved and fired of a barrage of threats and warnings to Seoul and its allies.

In a message posted on a US military website, General Walter Sharp, who heads the 28,500 US troops based in the South, described the exercise as "one of the largest joint staff directed theatre exercises in the world."

Many troops will be involved in command post training, while others will take part in field drills, the South Korean defence ministry spokesman said.

South Korean government officials, police and security authorities also will stage separate anti-guerrilla and anti-terrorism drills, he said.

In July, South Korea and the United States held a massive joint naval and air drill in the Sea of Japan (East Sea) and last week Seoul staged its largest-ever anti-submarine drill near the disputed Yellow Sea border.

Tensions further escalated last week after North Korea seized a South Korean squid fishing boat operating off the east coast and fired an artillery barrage into the Yellow Sea when South Korea was wrapping up the anti-submarine drill.