A South Korean man walks around destroyed houses one day after North Korea's artillery attack on Yeonpyeong Island. (Park Ji-ho/Yonhap/Associated Press)

As the U.S. and Seoul prepare for joint military exercises, North Korea is warning of more "retaliation" if South Korea carries out "reckless military provocations."

The exercises involve a U.S. nuclear-powered supercarrier and would begin Sunday in the Yellow Sea, just 110 kilometres south of Yeonpyeong, the island shelled by North Korea on Tuesday.

North Korea warned that its "military will launch second and third strong physical retaliations without hesitation if South Korean warmongers carry out reckless military provocations," according to the country's official Korean Central News Agency.

South Korean President Lee Myung-bak held a meeting of top officials to discuss security and economic impacts of the attack. He also vowed to beef up security around the islands near the site of the attack, the Yonhap news agency reported.

"We should not let our guard down in preparation for another possible North Korean provocation," Lee said, according to Yonhap news agency.

Meanwhile, the U.S. is calling on China to use its influence to restrain neighbouring North Korea from further belligerent acts following an artillery attack that killed two South Korean marines and two civilians and sparked a sharp escalation of tensions between the rival Koreas.

State Department spokesman P.J. Crowley called China "pivotal" to changing North Korea's behaviour and said Beijing has a responsibility to make it clear to Pyongyang that deliberate attempts to inflame tensions with Seoul are not acceptable.

Chinese officials approached

“China does have influence with North Korea and we would hope and expect China would use that influence” to ease tensions on the Korean peninsula, Crowley said Wednesday in Washington.

He said U.S. diplomats had delivered that message to Chinese officials in Washington and Beijing.

U.S. Secretary of State Hillary Clinton is expected to discuss the situation by telephone with China's foreign minister.

Korea fired dozens of artillery shells Tuesday onto the South Korean island Yeonpyeong in the Yellow Sea, 120 kilometres west of Seoul, setting off an exchange of fire in one of the most serious clashes of its kind since the Korean War of the early 1950s

Crowley said Tuesday's attack was a premeditated yet isolated or "one-off" incident, but China should still take a leading role in resolving the crisis.

Chinese Premier Wen Jiabao called for all sides to show "maximum restraint" and said his country opposes military provocations of all forms. He also urged the international community to work to ease tensions and called for renewed six-country talks aimed at persuading North Korea to dismantle its nuclear programs

Wen said those talks, involving the two Koreas, China, Russia, Japan and the United States, are the best way to ensure stability on the peninsula and its denuclearization.

The shelling by North Korea, quickly condemned by the U.S., Canada and several other countries, destroyed dozens of homes as well as killing four people. It also injured 15 troops and three civilians.

A map of the region where the hostilities occurred.

South Korea's troops were on high alert Wednesday. South Korean Defence Minister Kim Tae-young told the National Assembly Defence Committee that reinforcements will be sent to five islands near the disputed sea border, but provided no details.

The U.S. aircraft carrier USS George Washington set sail for the region from Tokyo on Wednesday to take part in previously scheduled military training with the South, which will continue from Nov. 28 to Dec. 1.

The skirmish began when North Korea warned the South to halt military drills near its sea border, according to South Korean officials.

When Seoul refused and began firing artillery into disputed waters — but away from the North Korean shore — the North shelled Yeonpyeong, which houses South Korean military installations and a small civilian population.

'Outrageous, unprovoked attack'

Seoul responded by unleashing its own barrage from K-9 155-mm self-propelled howitzers and scrambling fighter jets. Officials in Seoul said there could be considerable North Korean casualties but did not elaborate.

The U.S. government described the incident as "an outrageous, unprovoked attack," but sought to avoid any escalation and did not reposition any of its 29,000 troops stationed in the South.

Government officials in Seoul called the bombardments "inhumane atrocities" that violated the 1953 armistice halting the Korean War. The two sides technically remain at war because a peace treaty was never signed.

Yeonpyeong lies a mere 11 kilometres from and within sight of the North Korean mainland. Famous for its crabbing industry, it is home to about 1,700 civilians as well as South Korean troops. There are about 30 other small islands nearby.

Lee, who convened an emergency security meeting shortly after the initial bombardment, said an "indiscriminate attack on civilians can never be tolerated."

South Korea vowed massive retaliation if North Korea attacks again, and said Wednesday it would strengthen military forces in the disputed western waters near Yeonpyeong and halt aid to the communist North.

With files from The Associated Press