Japan on Monday imposed restrictions on exports used by South Korea's chip and smartphone companies, ramping up long-simmering tensions between the US allies over the use of forced labor during World War Two.

Seoul quickly hit back, calling the measures "unfair and in violation of international laws."

The move raises the stakes in a protracted dispute over South Korean court rulings requiring Japanese firms to compensate victims of a wartime forced labor policy.

The disagreement comes against the backdrop of decades of strained ties as the result of Japan's brutal 1910-45 colonial rule over the Korean peninsula.

The new measures take effect from July 4 and will significantly slow the export of several key substances used by South Korea's chip and smartphone giants.

Japan said they were the result of a breakdown in trust with Seoul.

"The export control system is built based on international relations of trust," Japan's Ministry of Economy, Trade and Industry (METI) said.

"After reviews by relevant ministries, it must be said that the relations of trust between Japan and South Korea have been significantly harmed," METI added.

The new restrictions apply to three chemicals as well as the transfer of manufacturing technologies, removing them from a list that effectively allowed expedited export.

It means that exporters will now have to apply for permission for each batch they wish to export to South Korea, a process that takes around 90 days each time, local media reported.

The chemicals affected by the move are fluorinated polyimide, which is used in the manufacture of displays, the photosensitizing agent resist used in chip manufacture, and hydrogen fluoride, which is used to clean chips. 

METI said it would also begin soliciting public comment on the removal of South Korea from a list of "white" countries that face minimal restrictions on technology transfer with national security implications.

South Korean trade official Park Tae-sung told a news briefing that the restrictions were illegal.

"Japan's export restrictions are in violation of World Trade Organization agreements in principle," he said.

"We will sternly respond to Japan's measures that are unfair and in violation of international laws."

But Japan's deputy chief cabinet secretary Yasutoshi Nishimura told a regular briefing that the move was "in accordance with international export regulations and World Trade Organization rules."

"In addition to the fact that it has become difficult to work on export control with South Korea under a relation of trust, we have also seen inappropriate cases in connection with export control as it relates to South Korea," he told reporters.

The measures come after a series of South Korean court rulings demanding Japanese firms compensate victims of wartime forced labor.