North Korea said yesterday it was scrapping all accords with South Korea, a move the South's prime minister said could be timed to coincide with Barack Obama taking office in the US.
The US State Department said the North Korean comments were "distinctly not helpful" but the US would keep pursuing a 2005 multilateral deal under which North Korea agreed to abandon its nuclear programs.
Analysts said the rise in tension made a military clash on the strongly-defended border more likely.
"There is neither way to improve [relations] nor hope to bring them on track," North Korea's KCNA news agency quoted the Committee for the Peaceful Reunification of Korea as saying.
"The confrontation between the North and the South in the political and military fields has been put to such extremes that the inter-Korean relations have reached the brink of a war."
KCNA also criticised the South Korean President, Lee Myung-bak, over the appointment of a new minister in charge of relations on the peninsula, saying he was an architect of the government's "undisguised policy for confrontation" with North Korea.
The North has repeatedly warned of war in the past few months and threatened to destroy the conservative government in Seoul that has ended a decade of free-flowing aid to Pyongyang since taking office a year ago.
South Korea's presidential Blue House largely ignored the rhetoric. "There is no need to react sensitively or get happy or sad over every single statement issued with some political motive," a presidential official said.
The South Korean Prime Minister, Han Seung-soo said from the World Economic Forum in Davos that he hoped the North would embrace dialogue. "We hope that instead of threats of this kind, North Korea would come out to talk to us on matters of mutual concern and interest.
"I am sure that the inauguration of the Obama administration must have had some impact on the thinking of North Korea on global issues, as well as the issue of the Korean peninsula."
The US State Department said the Obama administration was still reviewing its policy toward North Korea.
Masao Okonogi, a Korea expert at Keio University in Tokyo, said the North hoped by cutting ties with the South and Japan, it could more quickly push itself on to Mr Obama's agenda.
Read more from the Independent.