North Korea has blocked South Korean entry to a key joint industrial zone. The action follows a series of hardline threats that have been condemned by Washington as "dangerous, reckless" behavior.
South Korean officials said the North informed them Wednesday morning of the access ban which halts the daily movement of South Koreans into the Kaesong industrial zone, a Seoul-funded complex established in 2004.
The complex, which lies 10 kilometers (six miles) on the North side of the border, is a crucial source of hard currency for North Korea, which had been threatening for days to close it. Previous tension between the North and the South had never previously had a significant effect on the Kaesong complex.
Seoul's defense ministry said it had contingency plans to ensure the safety of the hundreds of South Koreans currently working at the complex.
"We have prepared a contingency plan, including possible military action, in case of a serious situation," Defense Minister Kim Kwan-Jin told ruling party MPs in a meeting.
"We should try to prevent the situation from going to the worst," he added.
The ministry said 46 South Koreans were expected to return from the complex by the end of Wednesday, with hundreds choosing instead to stay on to keep their companies running smoothly. Many of the South Koreans routinely stay for periods of several days, and operations were still running normally on Wednesday.
The Kaesong ban is the latest in North Korean provocations which have also seen Pyongyang threaten missile and nuclear strikes against the United States and its ally South Korea, in response to UN sanctions and joint military drills.
It was not clear how long the access ban would remain in place.
Around 53,000 North Koreans work at 120 South Korean plants at the complex.
On Tuesday North Korea announced that it will restart operations at its Yongbyon nuclear reactor. The five-megawatt, graphite-moderated reactor was closed in 2007 as part of international nuclear disarmament talks that have since stalled.
The reactor was the sole source of plutonium for Pyongyang's atomic weapons program. The country's remaining plutonium stockpile is believed to be enough for four to eight bombs. When fully operational, the reactor is capable of churning out enough plutonium in a year to produce one nuclear bomb.
In response, US Secretary of State John Kerry condemned the North's recent provocations in a joint news conference with his South Korean counterpart, Yun Byung-se, on Tuesday in Washington.
"The bottom line very simply is that what Kim Jong-Un has been choosing to do is provocative, it is dangerous, reckless, and the United States will not accept the DPRK as a nuclear state," Kerry said, referring to North Korea's new young leader and using the country's official name, the Democratic People's Republic of Korea.
hc/jr (Reuters, AFP, AP)