South Korea has developed a longer-range cruise missile capable of hitting nuclear or military sites in North Korea, a report said Saturday.

The state-run Agency for Defense Development has begun manufacturing the ground-to-ground Hyunmu-3C with a range of up to 1,500 kilometres (937 miles), Yonhap news agency quoted an unidentified defence official as saying.

The Hyunmu-3C missile would also be able to reach parts of China, Japan and Russia. The previous version of the Hyunmu had a range of only 1,000 km.

The report could not immediately be confirmed.

Under an agreement with the United States, which stations 28,500 troops in the country and guarantees a nuclear "umbrella" in case of war, Seoul limits its ballistic missiles to a maximum range of 300 km.

But it is allowed to extend the range of its terrain-hugging cruise missiles as long as their payload stays under 500 kilograms (1,100 pounds).

South Korea has pushed for longer-range weaponry to counter a threat from hundreds of North Korean ballistic missiles.

The North has about 600 Scud missiles capable of hitting targets in South Korea, and possibly also of reaching Japanese territory in some cases.

There are another 200 Rodong-1 missiles which could reach Tokyo.

In addition the North has three times test-launched intercontinental Taepodong missiles.

The two nations have remained technically at war since their 1950-53 conflict ended with just an armistice and not a peace treaty.

Tensions have risen since the South and the United States, citing the findings of a multinational investigation, accused the North of torpedoing a South Korean warship near the tense sea border in March.

The North angrily denies involvement and says a UN Security Council statement on July 9 -- which condemned the attack without specifying the culprit -- proves its point.

After the UN statement it reiterated conditional willingness to return to stalled six-party nuclear disarmament talks.

Seoul's unification ministry which handles cross-border ties said the North appears to be preparing a diplomatic offensive to lessen tensions.

In a weekly newsletter the ministry said the North seems willing to "turn the critical mood around through active dialogue" following the UN statement, which Pyongyang claimed as a diplomatic victory.

The South says its neighbour must first apologise for the attack on the ship which cost 46 lives and punish those responsible.