North Korean leader Kim Jong-Il watched a tank division drill, state media said Friday, as tensions remain high over the North's fire exchange with South Korea in November.

Kim expressed "great satisfaction" after observing the drill by the Seoul Ryu Kyong Su 105 Guards Tank Division, the official Korean Central News Agency said.

He called for "fully preparing all its soldiers as a match for a hundred fighters possessed of high military qualifications and combat ability", it said, without saying when and where the drill took place.

Cross-border tensions are high after the North shelled a South Korean island near the Yellow Sea border on November 23, killing four people including civilians.

The South has since staged a series of military exercises, including a live-fire drill on December 20 on the island, but the North did not follow through with threats of a new and deadlier attack.

On Friday the North's ruling communist party newspaper accused Seoul of aggravating a tense situation with military drills.

"Such action brought halt to the dialogue and cooperation between the north and the south which had been barely maintained. And it drove the situation of the Korean Peninsula to the brink of war again," Rodong Sinmun said in a commentary.

But South Korean Defence Minister Kim Kwan-Jin issued a strongly worded New Year message, ordering the military to maintain combat preparedness against any fresh attacks.

"If the enemy provokes again, we shall use all possible combat capabilities to win until the enemy surrenders," he said.

South Korea's national security system has faced fierce domestic criticism since the North's torpedo attack on a South Korean warship in March. The North's attack in November prompted claims the South's response was too feeble.

A retired army general was named Friday to head the South's new presidential team to oversee the handling of national emergencies such as a sudden attack by North Korea.

Ahn Kwang-Chan, a military policy specialist, became a presidential secretary and head of the office for national crisis management, the president's office said.Ahn, 54, previously served as head of the defence ministry's policy bureau. The new office will focus on predicting and managing a security crisis.