The Democratic People's Republic of Korea (DPRK) and the Republic of Korea (ROK) are still talking tough one month after the DPRK's artillery bombardment sent tensions soaring, with Pyongyang threatening nuclear war and Seoul vowing strong retaliation for any new attack.

Republic of Korea soldiers patrol along barbed wire fences in the demilitarized zone in Inje, northeast of Seoul on Thursday. [Lee Sang-Hak / Yonhap / Reuters]

An international think-tank urged the DPRK and the ROK to accept international arbitration to redraw the disputed Yellow Sea border.

"Measures must urgently be adopted to reduce the possibility of all-out war," the International Crisis Group said in a report.

The DPRK said on Thursday it was ready for a "sacred war" using its nuclear weapons, as the ROK held its second live-fire drill in a week.

DPRK Armed Forces Minister Kim Yong-chun said the ROK's firing drill Monday, on Yeonpyeong Island near the Yellow Sea border, was a preparation for a new Korean war.

"The revolutionary armed forces of the DPRK are getting fully prepared to launch a sacred war of justice of Korean style based on the nuclear deterrent at any time necessary to cope with the enemies' actions deliberately pushing the situation to the brink of a war," Kim said.

The DPRK on Nov 23 bombarded Yeonpyeong, killing four people including civilians. The DPRK said it was retaliating for an ROK firing drill that dropped shells into disputed waters.

The ROK's military, accused of a perceived feeble response to last month's bombardment, has been stressing it will hit back harder next time, using air power.

ROK President Lee Myung-bak, visiting a frontline army unit Thursday, warned of severe retaliation for any new attack.

Despite earlier strong threats, the DPRK did not retaliate for Monday's firing drill on Yeonpyeong. It also offered nuclear concessions, according to US politician Bill Richardson, who ended a visit to Pyongyang this week.

Richardson said the DPRK agreed to readmit UN atomic inspectors and negotiate the sale of nuclear fuel rods to a third party.

The New Mexico governor, who has longstanding contacts with the DPRK, said on Thursday the United States should consider resuming talks with Pyongyang.

Richardson said a resumption of the Six-Party Talks - under which the DPRK earlier agreed to give up its nuclear weapons in return for aid - could help prevent a new escalation of tensions.

If "they don't react militarily again to this recent drill, then maybe the time has come for the Six-Party Talks," he told CNN, referring to the ROK exercise staged on Thursday.