South Korea on Thursday launched its largest-ever anti-submarine exercise including live-fire training near the disputed sea border with North Korea, despite Pyongyang's threats of retaliation.

The South has warned the North it will not tolerate provocations during the five-day naval drill in the Yellow Sea, being staged in response to what it says was a deadly North Korean torpedo attack on a warship.

"This is the largest anti-submarine exercise in our military history, involving the army, navy, air force and marines," a Joint Chiefs of Staff (JCS) spokesman told AFP.

South Korea is mobilising 4,500 troops, backed by 29 ships including a submarine and a destroyer and 50 aircraft including jet fighters and attack helicopters.

The exercise began eight days after South Korea and the United States ended a massive joint naval and air drill in the Sea of Japan (East Sea) as a show of force against the North.

Pyongyang has angrily denied responsibility for the March sinking of the Cheonan warship, which killed 46 sailors and sharply raised tensions on the Korean peninsula.

The JCS said the latest exercise is defensive in nature and focused on repelling attacks by sea, including those by the North's feared commandos riding hovercraft.

Marines stationed on islands near the disputed Yellow Sea border with the North staged live-fire battery exercises but the guns were trained southwest.

"We don't fire toward the sea border, even if the North does sometimes in provocative acts," the JCS spokesman said.

"Except for the batteries on the islands, you won't hear much of the sound of live fire in the sea near the border."

Most of the sea drills, including anti-submarine training involving torpedo and depth-charge firing, took place in the Yellow Sea but far south of the border, another JCS official said.

After a 4,400-tonne destroyer tracked down a hypothetical enemy submarine, a helicopter fired a torpedo while a warship dropped depth charges, he added.

This week's exercise is one of a series planned by the South -- either alone or jointly with its ally the United States -- in the aftermath of the sinking.

The North's military Tuesday blasted this week's exercise as a "direct military invasion" and warned that "reckless naval firing" by the South would be countered "with strong physical retaliation".

On Thursday Pyongyang termed the drill a deliberate provocation and threatened "the most powerful" retaliation if the South triggers a conflict.

"Our people and military will mercilessly crush the provokers and their stronghold with the most powerful war tactics and strike means beyond imagination if they ever dare to set a fire," said a statement from a state body called the Committee for Peaceful Reunification of the Fatherland.

As of mid-afternoon Thursday no unusual movement on the North's side had been detected, the JCS spokesman said.

A multinational investigation concluded that a North Korean submarine had torpedoed the warship in March near the Yellow Sea border, the scene of several naval clashes in the past.

Washington slapped it with new sanctions to punish it for the alleged attack and to push it to scrap its nuclear weapons programme.

The North's leader Kim Jong-Il has inspected a power station nearing completion, praising the project "as one more great victory" against imperialists' moves to "isolate and stifle" his country, the Communist party daily Rodong Sinmun said Thursday.