At least one ballistic missile with an estimated 2,000-mile (3,000 km) range is fuelled and ready for launch, US and South Korean sources say.
Pyongyang has been making bellicose threats against South Korea, Japan and US bases in the region.
The threats follow tough new UN sanctions imposed on North Korea last month following its third nuclear test in February this year.
Separately, an initial investigation by South Korea into a major cyber attack last month that affected a number of banks and broadcasters has said North Korea is to blame.
North Korea is believed to have completed preparations for a missile launch after it moved two Musudan missiles to its east coast, Yonhap news agency says.
In anticipation, the South Korea-US Combined Forces have raised their alert level to Watchcon 2 (Vital threat), to increase surveillance monitoring, Yonhap quoted a senior military official as saying.
North Korea unveiled the Musudan missile during a military parade in 2010 but has yet to test it. There are reports, however, that it may have been sold to Iran and tested there.
The launch could happen “anytime from now”, South Korean Foreign Minister Yun Byung-se told parliament.
A test launch would be a violation of UN Security Council Resolution 1718, passed in 2006, which states the North “must not conduct any further nuclear test or launch of a ballistic missile”.
North Korea has tested intermediate range missiles before and during periods of crisis and tension.
While another test launch would certainly be seen as provocative, it is unlikely to have any major, short-term military significance unless it goes wrong.
The raising of South Korea’s alert status comes as Japan deployed anti-missile defenses in Tokyo as a precaution.
“We are on high alert,” said Japan’s Defence Minister Itsunori Onodera.
A number of travel agencies in China have reported that tourist trips into North Korea have been suspended.
One travel agent in the north-eastern city of Dandong told Reuters news agency: “All [tourist] travel to North Korea has been stopped from today and I’ve no idea when it will restart.”
The border remains open to commercial traffic.
Meanwhile, an official investigation by South Korea into last month’s cyber attack traced the malicious codes used to six computers in North Korea.
“We’ve collected a lot of evidence to determine the North’s Reconnaissance General Bureau led the attack, which had been prepared for at least eight months,” a spokesman for the Korea Internet and Security Agency said.
The attack on March 20 severely affected the KBS, MBC and YTN broadcasters and operations at the Shinhan, NongHyup and Jeju banks.
Yesterday North Korea has warned foreigners in South Korea to take precautions in case of war and UN Secretary-General Ban Ki-moon warned the crisis on the Korean peninsula may become “uncontrollable”.
Ban Ki-moon once again urged North Korea to tone down its “provocative rhetoric” and to keep open a joint North-South Korean industrial complex.
North Koreans failed to report for work at the Kaesong complex on Tuesday, suspending one of the few points of co-operation with South Korea.
Watchcon status:
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