North Korea on Friday threatened a "merciless" military strike on South Korean territory next week, prompting a swift vow of retaliation from Seoul in a serious escalation of cross-border tensions.

The Korean People's Army (KPA) said it would launch the attack if North Korean defectors in the South went ahead with plans to scatter anti-Pyongyang propaganda leaflets Monday from balloons floated over the border.

The threat came a day after South Korean President Lee Myung-bak made a surprise visit to an island close to the disputed maritime frontier that was shelled by the North two years ago.

"The moment a minor movement for the scattering is captured... a merciless military strike by the Western Front will be put into practice without warning," the KPA said in a statement carried by the official Korean Central News Agency.

"The surrounding area will become targets of direct firing of the KPA," the statement said, advising all local residents to "evacuate in anticipation."

A group of North Korean defectors plan to carry out the leafleting exercise on Monday at 11:30 am (0230 GMT) at the border near the town of Paju, around 60 kilometers north of Seoul.

Such events are relatively common and North Korea has threatened action in the past, but Friday's statement was unusually strong with its specific naming of the time and location, coupled with the evacuation warning.

South Korea responded swiftly with Defense Minister Kim Kwan-jin promising military retaliation in the event of any attack.

"If that happens, we will strike back at the origin of fire," Kim was quoted as saying by Yonhap news agency.

"We are fully prepared," Kim said, adding that troops had been put on alert along the western section of the border.

The group planning Monday's leafleting, Fighters for a Free North Korea, said they had no intention of calling off the event.

During his visit to Yeonpyeong island on Wednesday, Lee had told troops stationed there that they should "fight to the death" to protect the border and "retaliate strongly" to any North Korean provocation.