A spokesman for the Joint Chiefs of Staff confirmed the clash to AFP but said details were not immediately available.

A government source quoted by Yonhap news agency said a North Korean patrol boat crossed the disputed border in the Yellow Sea, prompting South Korea's navy to fire warning shots.

When the boat continued sailing southwards, the South's navy opened fire at it, the source was quoted as saying. The North Korean boat fired back.

‘There were no casualties on our side while the North Korean boat, half-destroyed, sailed back to the North,’ the source was quoted as saying.

The clash broke out at 11:28 am local time near Daechong island. It came eight days before US President Barack Obama is scheduled to arrive in South Korea as part of an Asian tour.

The border known as the Northern Limit Line (NLL) was the scene of deadly naval battles in 1999 and 2002 and has always been a potential flashpoint.

The North's navy last month accused South Korea of sending warships across the line to stir tensions, and said the ‘reckless military provocations’ could trigger armed clashes.

The NLL was drawn up unilaterally by United Nations forces at the end of the Korean War in 1953. The North has never recognised it and wants it drawn further to the south.

After months of hostility marked by missile test-launches and a nuclear test, the communist North has since August put out peace feelers both to South Korea and the United States.

It freed five South Korean detainees, eased curbs on the operations of a joint industrial estate, sent envoys for talks with President Lee Myung-Bak and allowed a family reunion programme to resume.

The North has also invited US special envoy Stephen Bosworth to Pyongyang for talks on ending the standoff about its nuclear weapons programme.

Washington was expected to decide soon to go ahead with the trip.