Senior North Korean military officials demanded Monday that the U.S. and South Korea call off their annual military drill involving tens of thousands of troops, warning the exercise would exacerbate tensions on the Korean peninsula, according to a news report.

The Yonhap news agency quoted a South Korean defence source as saying North Korea filed "lengthy complaints" against the exercise during a meeting with the U.S.-led UN command. The meeting comes amid heightened tensions in the region and concerns that the North intends to test fire a long-range missile.

The talks at the village of Panmunjom inside the Demilitarized Zone dividing North and South Korea — the first meetings between general level military officials since 2002 — were hastily arranged after the North proposed them last week, UN command spokesman Kim Yong-kyu said.

Yonhap quoted an unnamed South Korean military official as saying the North warned the upcoming drill would "further stir up" tensions on the Korean peninsula. UN command said it would nonetheless carry out the drill, which it deemed an important military exercise unrelated to any alleged plan to attack North Korea, Yonhap reported.

The report said the drill would involve 26,000 U.S. troops, an unspecified number of South Korean forces and a U.S. bomber.

Neither the UN command nor the South Korean Defence Ministry would confirm the Yonhap report. One South Korean Defence official told the Korea Times that the two sides had "positive" discussions on easing border tensions and building mutual respect, but that no future talks were scheduled.

The UN Command only said the sides discussed "measures to reduce tension and introduce transparency" and agreed to further meetings during a half hour of talks.

Relations at a low

Relations between the two Koreas are at their lowest point in a decade, with North Korea bristling over South Korean President Lee Myung-bak's hard-line policy toward Pyongyang. The two Koreas technically remain at war because their three-year conflict in the 1950s ended in a truce, not a peace treaty.

The tensions have intensified in recent weeks amid reports that North Korea is preparing to test a long-range missile believed capable of reaching U.S. territory.

Analysts say communist North Korea also wants to capture U.S. President Barack Obama's attention at a time when international disarmament talks with the regime remain stalled.

Obama is dispatching his envoy for North Korea, Stephen W. Bosworth, to Asia this week to discuss the nuclear dispute.

Bosworth plans to meet with officials in China, Japan and South Korea, and will consult separately with Russian officials, the State Department said.

The North last week called its plans a peaceful bid to push its space program forward by sending a communications satellite into orbit and warned it would "punish" anyone who attempts to disrupt its launch plan.

Neighbouring governments believe the satellite claim may be a cover for a missile launch.

The U.S., South Korea and other neighbouring nations have warned North Korea against firing either a missile or a satellite, saying both would invite international sanctions.

North Korea, which in 2006 tested a nuclear weapon and unsuccessfully fired a long-range missile, is banned from engaging in any ballistic missile activity under a UN Security Council resolution.

The North, meanwhile, stepped up the rhetoric against South Korea and the U.S., citing a policy of "confrontation" against the communist country.

"If the U.S. warlike forces opt for reckless military confrontation and provocation of a war of aggression against [North Korea], the latter will mercilessly stamp out aggressors," said Yang Hyong Sop, vice-president of the parliament, the state-run Korean Central News Agency reported Sunday.

The warning comes as the U.S. and South Korea prepare for next week's annual military exercises, drills that North Korea calls a rehearsal for invasion but that Seoul and Washington say are purely defensive.

South Korea's new unification minister, Hyun In-taek, said Monday that Seoul is ready for dialogue with Pyongyang to improve the "difficult" ties between the neighbouring nations.

The two Koreas remain divided by the world's most heavily fortified border, with the U.S.-led UN Command overseeing their 1953 ceasefire.

Although other nations contributed forces during the Korean War, U.S. troops are the only combat forces left on the peninsula apart from the South Korean military. The U.S. has 28,500 troops in South Korea.