NORTH Korea says it has entered a "state of war" with South Korea in a continued escalation of threatening rhetoric directed at both its neighbour and the United States.

In a government statement, North Korea said it would deal with all matters involving South Korea according to "wartime regulations" and promised "stern physical actions" against "any provocative act".

The statement also said North Korea would retaliate against any provocations by the US and South Korea without "any prior notice". Tensions have been ramped up by the annual US-South Korea military exercises which have just taken place.

The statement came a day after North Korean leader Kim Jong-un threatened the US because two American B-2 stealth bombers flew a training mission over South Korea.

The North's statement said: "From this time on, the North-South relations will be entering the state of war and all issues raised between the North and the South will be handled accordingly. The longstanding situation of the Korean peninsula being neither at peace nor at war is finally over."

The North has made multiple threats against both South Korea and America in recent weeks, even threatening a "pre-emptive nuclear strike". The US mainland and bases in Hawaii and Guam, as well as South Korea, were all named as targets. North Korea's longest range rockets are thought to be able to reach Alaska.

Pyongyang has also cut a military hotline with the South – the last direct official link between the two nations.

The latest threats follow a series of increasingly belligerent statements made since the United Nations imposed new sanctions on North Korea in response to the country's third nuclear test last month.

Previous tests were carried out in 2006 and 2009. In 2010, North Korea shelled the South's Yeonpyeong Island, killing four citizens.

The latest threats prompted calls from a number of countries including Britain, the US, Russia and China – which is North Korea's biggest trading partner – for the escalating rhetoric to be calmed.

However, while tensions are high, analysts believe the inflammatory language is aimed at pushing Washington into talks and that the regime would not risk full-blown conflict.

In the UK, a spokesman for the Foreign Office yesterday said the statement from North Korea had been "noted".

He said: "We have made clear to North Korea that its long-term interests will only be served by constructive engagement with the international community. These threatening statements will only seek to isolate it further.

"The armistice agreement has enabled the Korean peninsula to benefit from 60 years' peace. Maintaining it is in the best interests of all."

In Washington DC, Caitlin Hayden, a spokeswoman for the National Security Council, said the US had seen reports of "a new and unconstructive statement from North Korea". She added: "We take these threats seriously and remain in close contact with our South Korean allies."

Russia has warned that the heightened military activity was slipping into a "vicious cycle" that could get out of control. It has frequently balanced criticism of North Korea – a Soviet-era client state – with calls on the US and South Korea to refrain from provocative actions.

Yesterday, senior Russian foreign ministry official Grigory Logvinov said: "We hope that all parties will exercise maximum responsibility and restraint, and no-one will cross the point of no return.

"We expect that everyone understands that a recurrence of the war on the peninsula is definitely unacceptable."

France said it was deeply worried about the situation on the Korean peninsula, while Alexander Vershbow, Nato's deputy secretary-general, said the alliance hoped "this is more posturing than a prelude to any armed hostilities".

Officials in Seoul said South Korean workers continued to cross the border yesterday to their jobs at a joint factory park in North Korea funded by the South, indicating that the North is not immediately considering starting a war.

However, the North has threatened to shut the plant – which gives it access to $2 billion in trade a year – if insults to its "dignity" continue.

"If the puppet traitor group continues to mention the fact Kaesong industrial zone is being kept operating and damages our dignity, it will be mercilessly shut off and shut down," the North's KCNA news yesterday quoted an agency that operates the park as saying.

The divided Korean peninsula is already in a technical state of war because the 1950-53 Korean war ended in a ceasefire, not a peace treaty. However, last month, North Korea said it was scrapping an armistice agreement with the US that ended the Korean war.

Pyongyang sees the US and South Korean routine military drills, which have been going on since the beginning of March, as rehearsals for an invasion, while the allies call them routine and defensive.

An exercise which involved two nuclear-capable US B-2 bombers dropping dummy munitions on a South Korean island range as part of joint drills seemingly triggered the latest Pyongyang outburst.

US officials described the flight as a diplomatic sortie aimed at reassuring allies South Korea and Japan.