SEOUL--North Korea announced Thursday that it will scrap an accord aimed at preventing accidental naval clashes with South Korea in retaliation for Seoul blaming Pyongyang for a torpedo attack that sank a South Korean warship. Tension on the divided peninsula has risen dramatically since a team of international investigators said last week that a torpedo fired by a North Korean submarine tore apart and sank a South Korean warship. On Thursday, North Korea's military said it will "completely nullify" an inter-Korean accord aimed at preventing accidental armed skirmishes along the disputed western sea border ��" a scene of three bloody maritime battles between the two Koreas. "Immediate physical strikes will be launched" against any South Korean ships that intrude into North Korean waters, the country's military said in a statement, carried by the official Korean Central News Agency. It said it will also start a review to possibly ban South Korean personnel and vehicles from entering a joint industrial park in North Korean border town of Kaesong ��" the last remaining major inter-Korean reconciliation project. It gave no timeframe, however. The military said the measures are its first-phase reaction to "the reckless moves of the group of traitors and confrontation maniacs," suggesting that more could follow. A South Korean Defense Ministry official said South Korea will "resolutely" deal with the North's measures, though did not elaborate. He spoke on condition of anonymity, citing department policy. The announcement came hours after a fleet of South Korean warships staged a large-scale anti-submarine drill off the west coast despite North Korea's warnings that such exercises will drive the peninsula to the brink of war. The two Koreas are still technically at war because their 1950-53 conflict ended with an armistice, not a peace treaty. The U.S. stations 28,500 troops in South Korea, a legacy of the Korean War. South Korean and U.S. troops are on their highest alert since North Korea's second nuclear test in May last year, reports said. The mass-circulation JoongAng Ilbo newspaper, citing an unidentified Seoul official, reported Thursday the South Korean-U.S. combined forces command raised their surveillance level called Watch Condition, up a level from 3 to 2. Level 1 is the highest. South Korea, backed by the U.S., Japan and other allies, has begun carrying out punitive measures that range from slashing trade and resuming propaganda warfare to barring the North's cargo ships ��" the strongest it can implement short of military action.