North Korea abruptly announced a suspension of high-level inter-Korean talks scheduled for Wednesday, citing ongoing US-South Korean military drills and also threatened to pull out of a summit with US President Donald Trump if Washington pushes it to give up nuclear weapons.
It also called into question whether June 12 summit between North Korean leader Kim Jong-un and Trump would go ahead as planned.
"The US will have to undertake careful deliberations about the fate of the planned North Korea-US summit in light of this provocative military ruckus jointly conducted with the South Korean authorities," the KCNA report said.
"This (joint military) exercise targeting us... is a flagrant challenge to the Panmunjom Declaration and an intentional military provocation running counter to the positive development on the Korean Peninsula," the report said.
"We have no choice but to suspend the North-South high-level talks planned for the 16th."
The two-week US-South Korea exercise kicked off on Friday, involving some 100 warplanes, including eight F-22 radar-evading fighters and an unspecified number of B-52 bombers and F-15K jets.
Kim's statement, carried by the state media, said that if the US "corners us and unilaterally demands we give up nuclear weapons we will no longer have an interest in talks" and "will have to reconsider" attending the summit in Singapore.
He said North Korea did have "high hopes" but that it was "very unfortunate that the US was provoking us ahead of the summit by spitting out ludicrous statements".
In an angry statement, North Korea's Vice Foreign Minister Kim Kye-gwan accused the US of harbouring sinister intentions. He pointed the finger squarely at US National Security Adviser John Bolton.
Bolton earlier said North Korea could follow a "Libya model" of verifiable denuclearisation, but Pyongyang in the past had suggested that Libya may have escaped Western military intervention in 2011 had it kept its nuclear weapons programme.
Bolton's comments, Kim Kye-gwan said, were indicative of "an awfully sinister move to impose on our dignified state the destiny of Libya or Iraq which had been collapsed due to yielding the whole of their countries to big powers".
"It is absolutely absurd to dare compare (North Korea), a nuclear weapon state, to Libya which had been at the initial stage of nuclear development," he said.
"World knows too well that our country is neither Libya nor Iraq which have met miserable fate."
The inter-Korean talks were meant to take place on the southern side of the truce village of Panmunjom to discuss follow-up measures to the two Korean leaders' summit in April.
The summit agreement, billed the Panmunjom Declaration, called for formally ending the 1950-53 Korean War within the year and pursuing "complete denuclearization" of the Korean Peninsula.
South Korean President Moon Jae-in and Kim also agreed to halt all hostile acts against each other, open a joint liaison office in the North's border city of Kaesong and push various economic cooperation projects.
Pyongyang accused Seoul and Washington of carrying out large-scale air drills against Pyongyang before the "ink on the declaration had a chance to dry".
Seoul's Unification Ministry said it was informed of the meeting's "indefinite postponement" in a notice sent by Ri Son-kwon, chairman of the Committee for the Peaceful Reunification of the Country, a North Korean agency in charge of inter-Korean exchange.
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