South Korea forces went to "crisis status" returning fire, lobbing more than 100 shells toward North Korean positions and scrambling fighter jets to the island, where the shelling injured at least 15 military personnel and 3 civilians, as well as set fire to homes on the island, The New York Times reported.
About 1,600 island residents were evacuated to shelters.
South Korean President Lee Mying-bak huddled with top government ministers Tuesday and ordered attacks on North Korea's missile base if the North made any "indication of further provocation," The Korea Herald reported.
"This firing of coastline artillery by North Korea is clearly an intentional and premeditated attack that violates the Korean War armistice agreement," said Lt. Gen. Lee Hong-ki of the South's Joint Chiefs of Staff. "Currently, our military is focusing on deterring further provocation from the North and managing the situation stably. But if North Korea stages further provocation, we will act sternly against it."
North Korea's attack on Yeonpyeong Island, located just south of the countries' disputed border in the Yellow Sea, came amid new tensions over Pyongyang's claim of having a new uranium enrichment facility and several months after a leadership transition in North Korea became known with the introduction of Kim Jong Un, the youngest son of the country's leader Kim Jong Il.
Some observers said they see the attack as a political strategy to consolidate power around the younger Kim for when he eventually assumes leadership of the reclusive and impoverished country, the Yonhap News Agency said.
Hours after the attack, North Korea's Supreme Command of the Korean People's Army accused Seoul of initiating the firing and threatened "merciless military attacks" if South Korea violates its waters. The attack occurred as 70,000 South Korean troops were starting an annual nationwide military drill.
"Should the South Korean puppet group dare intrude into the territorial waters of (Democratic People's Republic of Korea, North Korea's official name) … the revolutionary armed forces of the DPRK will unhesitatingly continue taking merciless military counter-actions against it," North Korean leaders said through the state-run Korean Central News Agency.
South Korean President Lee Myung-bak ordered the military to be ready with "multiple-fold retaliation" against Pyongyang, saying North Korea's missile base would be struck if there were indications of another attack, Yonhap said.
"We will not in any way tolerate this," Lee's chief spokesman, Hong Sang-pyo, said after the president met with security advisers.
In a statement, the United States condemned the attack and restated its commitment to South Korea.
"The United States strongly condemns this attack and calls on North Korea to halt its belligerent action and to fully abide by the terms of the Armistice Agreement," the statement read. "The United States is firmly committed to the defense of our ally, the Republic of Korea, and to the maintenance of regional peace and stability."
Chinese officials expressed concern about the situation and urged both sides to resume the so-called six-party negotiations on North Korea's denuclearization.
"We hope the relevant the parties will do more (to contribute) to the peace and stability of the Korean peninsula," Foreign Ministry spokesman Hong Lei said.
A Russian Foreign Ministry official urged calm, telling Interfax, "It is important that this not escalate tensions on the Korean peninsula."