South Korean President Lee Myung-bak, held emergency meetings with top security and economic officials to determine a response to North Korea's shelling of a South Korean island. The government vows to increase security to protect its border areas.
South Korea will put more troops on its western maritime frontier after one island was hit by a North Korean artillery barrage.
On Thursday, the Presidential Blue House said the rules are being changed to allow the military to respond more forcefully at the start of any skirmish with North Korea.
Also Thursday, China's foreign minister canceled a visit to the South Korean capital on Friday. China is North Korea's main ally.
South Korean Foreign Ministry spokesman Kim Young-sun indicated Seoul has concerns about the cancellation.
Kim says Chinese officials explained there is a scheduling conflict, but Seoul wants further explanation from Beijing about the sudden postponement.
The Foreign Ministry says joint naval maneuvers with the United States in the Yellow Sea, beginning Sunday, will send a clear message in the wake of the North Korean artillery barrage. But it could further provoke Pyongyang and anger Beijing.
The war games will include a U.S. aircraft carrier and a pair of South Korean naval destroyers. Chinese officials on Thursday expressed concern about the exercise.
Seoul says Pyongyang on Thursday rejected holding general officer level talks to reducing soaring tensions.
North Korea vows additional "strong physical retaliatory blows" if it sees, what it terms, more "reckless military provocations" from the South.
In Tokyo, the Japanese government pledged closer cooperation with Washington and Seoul to counter North Korea.
Prime Minister Naoto Kan, speaking in Parliament, noted that for the first time since the Korean War of the early 1950's the North Koreans fired at a place where South Koreans live.
Mr. Kan says the attack is extremely grave and has put the Korean peninsula on the brink of war. Severe action, he adds, needs to be taken to punish North Korea.
During an annual South Korean military exercise on Tuesday, North Korea fired an estimated 170 artillery shells at Yeonpyeong island. Two South Korean marines and two civilians died in the shelling.
South Korea returned fire and its military says it may have inflicted significant casualties.
North Korea has not commented on any damage or casualties.
It did say Thursday "the United States can never evade responsibility" for Tuesday's artillery exchange, because of its role in drawing the maritime border. North Korea has never accepted the border.
The U.S. military says although its troops were participating in the drill none were on the island at the time of the attack.
The incident has sharply escalated tensions on the peninsula. Since the end of the Korean War in 1953, the two sides have occasionally engaged in gunfire, but this is the first time that North Korea has attacked a civilian community. They have never signed a peace treaty.