South Korea and the United States launched a joint naval exercise involving a US nuclear submarine Monday, as tensions rise on the Korean peninsula ahead of an expected nuclear test by North Korea.

A defence ministry spokesman confirmed the three-day drill -- condemned as a "warmongering" exercise by North Korea -- was under way in the East Sea (Sea of Japan) off the southeastern South Korean port of Pohang.

Although South Korean military officials stressed the drill was scheduled before the North threatened to detonate its third nuclear device, the presence of the submarine has been seen as a warning to Pyongyang.

The USS San Francisco, armed with Tomahawk cruise missiles, is joined in the drill by a 9,800-tonne Aegis destroyer, the USS Shiloh.

"The exercise includes at-sea operating training, detecting and tracking a submarine, anti-air and anti-ship live fire training and anti-missile training," the Yonhap news agency quoted one military official as saying.

The drill comes as the North has ramped up daily threats of a nuclear test in response to expanded UN sanctions imposed after its long-range rocket launch in December.

On Sunday, state media reported that the North's young leader, Kim Jong-Un, had chaired a high-level meeting to discuss a "great turn" in bolstering military capability and issue "important" guidelines to top officials.

Although the report made no specific mention of a nuclear test, many observers in South Korea saw the meeting as amounting to an official go-ahead for a detonation.

Some predict the test will come before the Lunar New Year on February 10, while others suggest it will be timed to coincide with the birthday of Kim Jong-Un's father and late leader Kim Jong-Il on February 16.

South Korean President Lee Myung-Bak urged officials to "stand well prepared" for any test after a meeting Sunday with his top security advisers, and the defence ministry said Monday that the North had completed all technical preparations.

"The only thing left to make is a political judgment," said ministry spokesman Kim Min-Seok, calling on Pyongyang to show restraint.

Recent satellite imagery has confirmed activity at the northeastern nuclear test site at Punggye-ri, with the North covering the entrance to a test tunnel in an apparent attempt to prevent external monitoring.

Over the past week Pyongyang has issued a series of daily warnings threatening an aggressive response to the latest UN sanctions, including a promise Saturday of the "toughest retaliation".

The North insists that its December rocket launch was a purely scientific mission aimed at putting a satellite in orbit.

But most of the world viewed it as a disguised ballistic missile test that violated UN resolutions triggered by the North's previous nuclear tests in 2006 and 2009.

South Korea's president-elect Park Geun-Hye, who takes office later this month and campaigned on a promise of greater engagement with Pyongyang, warned the North that the consequences of a nuclear test would be severe.

"I urge North Korea once again to immediately cancel its plan for a third nuclear test," Park said Monday.

"North Korea must realise that it will gain nothing from this kind of provocation and will instead face a strong response from the international community."

Seoul's top nuclear envoy left for Beijing on Sunday to meet with his Chinese counterpart in an apparent last ditch effort to avert another test.

The North's only major ally and economic lifeline, China is seen as the one country with real leverage over the regime in Pyongyang.

Beijing also chairs the stalled six-nation nuclear disarmament forum on the North, which involves the two Koreas, Japan, the United States and Russia.

The North withdrew from the aid-for-denuclearisation talks in April 2009 and staged its second atomic test a month later.