North Korea says it is kicking out all South Koreans from the jointly run Kaesong industrial zone, calling the South's move to suspend operations, in retaliation for Sunday's rocket launch by the North, a "declaration of war".
The North declared the industrial park, run by the rivals as a symbol of co-operation for more than a decade, a military control zone, the agency that handles its ties with Seoul said on Thursday, according to the official KCNA news agency.
Dozens of South Korean trucks were already returning across the border earlier in the day, laden with goods and equipment, after the South said it was pulling out.
Isolated North Korea regularly dismisses the South as a puppet of the United States and just as regularly accuses both of acts of war against it.
North Korea tested what it said was a hydrogen bomb on January 6 and on Sunday launched a rocket, putting a satellite into orbit.
The United States, Japan and South Korea said Sunday's launch was a ballistic missile test, and like last month's nuclear test, a violation of UN resolutions. The US Senate voted unanimously in favour of tougher sanctions.
North Korea ordered South Koreans out of the zone by late afternoon, forbidding them to take anything other than personal belongings, KCNA said. South Korea said after the North's announcement that its top priority was the safe return of all of its people.
Halting activity at the park, where 124 South Korean companies employed about 55,000 North Koreans, cuts the last significant vestige of North-South cooperation - a rare opportunity for Koreans divided by the 1950-53 war to interact on a daily basis.
North Korean workers were given a taste of life in the South at the complex, about 54km northwest of Seoul, including snack foods like Choco Pies and toiletries that were resold as luxury items in the North.
They also rubbed shoulders with their managers from South Korea. Supporters of the project said that kind of contact was important in promoting inter-Korean understanding, despite concerns that Pyongyang might have used proceeds from Kaesong to help fund its nuclear and missile programs.
For the North, the revenue opportunity from Kaesong - $US110 million ($A154.96 million) in wages and fees in 2015 - was deemed worth the risk of exposing its workers to influences from the prosperous South. In recent years, North Koreans have had increasing access to contraband media, exposing them to life in the South and China.
The average wage for North Korean workers at Kaesong was roughly $US160 a month, paid to a state management company. The workers received about 20 per cent of that in coupons and North Korean currency, said Cho Bong-hyun, who heads research on North Korea's economy at IBK Bank in Seoul.
A South Korean government official involved in North Korea policy said it was difficult to see how operations could be resumed any time soon at Kaesong, which opened in 2005.
