South Korea will withdraw all remaining workers from a jointly run industrial zone in North Korea, it said on Friday, after Pyongyang rejected a call for formal talks to end a standoff that led to operations being suspended.

The decision to remove about 170 people from the Kaesong factory park located just north of the armed border deepens a conflict between the two Koreas and puts at risk their last remaining channel of exchange that resulted from their breakthrough summit in 2000 and a bid to improve ties.

The two Koreas are technically at war under a mere truce that ended hostilities in their 1950-53 conflict and North Korea, angry at UN sanctions and joint South Korean-US military drills, has threatened both countries with nuclear attacks in recent weeks.

"Because our nationals remaining in the Kaesong industrial zone are experiencing greater difficulties due to the North's unjust actions, the government has come to the unavoidable decision to bring back all remaining personnel in order to protect their safety," South Korean Unification Minister Ryoo Kihl-jae said.

The North withdrew its 53,000 workers from the complex this month amid spiraling tension between the two Koreas. The North has prevented South Korean workers and supplies from getting in to the zone since April 3.

On Thursday, South Korea made the proposal for formal talks as the South Korean workers who remained at the zone were believed to be running out of food and other supplies.

But North Korea on Friday rejected the proposal for talks, saying the South has acted in an "unpardonable" manner to jeopardize a "precious" legacy of the rivals' bid to seek peace.

The North's National Defence Commission, its supreme leadership body, repeated that what it saw as the reckless behavior of the South had thrown into question the safety of the zone's operations, saying that it would take decisive action should South Korea aggravate the situation.

Labeling Seoul's demand as being "little short of an 'ultimatum,'" the commission said in a statement the dialogue offer "is nothing but a crafty trick."

If Seoul is worried about the lives of South Koreans still in the industrial zone, it should withdraw all of them to the south side, and Pyongyang will take humanitarian measures to ensure their safety, the commission said in the statement.

Should Seoul keep aggravating the situation, it would be the North Korea, not South Korea, "that will be forced to take the final decisive and crucial measure first," it warned.

The Kaesong project opened in 2004 as part of a so-called sunshine policy of engagement between the two Koreas.

The number of South Koreans in the industrial zone has dwindled from the 700 normally needed to keep the factories running to about 170, seen as the minimum number needed to safeguard assets at the 1 trillion won ($894.73 million) park.

Reuters - Xinhua