The surprise move sparked concern that the communist nation could put other threats against the South into action, including taking military action and moving troops to border regions disarmed under inter-Korean agreements, reports Yonhap News Agency.

North Korea's state media confirmed that the liaison office was "completely ruined".

"The relevant field of North Korea put into practice the measure of completely destroying the North-South joint liaison office in the Kaesong Industrial Zone in the wake of cutting off all the communication liaison lines between the north and the south," Pyongyang's state-run Korean Central News Agency (KCNA) said in a report.

The two Koreas launched the liaison office in September 2018 to facilitate inter-Korean exchange and cooperation amid a reconciliatory mood created by summit talks between their leaders.

The office suspended its operations in early January due to concerns over the coronavirus pandemic.

The destruction was in line with "the mindset of the enraged people to surely force human scum and those, who have sheltered the scum, to pay dearly for their crimes", KCNA said, referring to North Korean defectors in the South sending anti-Pyongyang propaganda leaflets.

"At 2.50 p.m., the liaison office was tragically ruined with a terrific explosion," it said.

Earlier, witnesses and sources said smoke was seen and an explosion was heard from the border town, with residents in South Korea's northernmost village of Daeseong-dong saying that dark smoke began billowing with a bang sound, according to the Yonhap News Agency report.

The office of South Korean President Moon Jae-in convened an emergency meeting of the National Security Council to discuss the destruction.

Moon did not attend the session and details of the meeting were not immediately available.

The explosion came after Kim Yo-jong, the sister of North Korean leader Kim Jong-un, warned on June 13 that "before long, a tragic scene of the useless North-South joint liaison office completely collapsed would be seen".

The North has been lashing out at the South almost daily for failing to stop defectors from sending anti-Pyongyang leaflets across the border via balloons.

Pyongyang has vowed to deal with South Korea as an "enemy", cutting off all cross-border communication lines, and threatened to take other measures, including military action.

Following the explosion in Kaesong, the South Korean military tightened its surveillance and readiness posture for possible accidental clashes near the tense border areas, according to officials.

Earlier on Tuesday, the General Staff of the (North) Korean People's Army warned that it is reviewing an action plan to advance into "the zones that had been demilitarized under the north-south agreement, turn the front line into a fortress and further heighten the vigilance" against the South, the Yonhap News Agency reported.

The demolition of the liaison office marked the latest setback in inter-Korean relations, which have been almost stalled since a no-deal summit between Pyongyang and Washington in February last year.

Last October, North Korea demanded the South tear down all "unpleasant-looking" facilities at the now-shuttered Mount Kumgang resort on its east coast.

Launched in 1998, the tour program was a symbol of inter-Korean reconciliation and cooperation.