North Korean leader Kim Jong-Un has urged the army to ensure its combat readiness ahead of US-South Korea military exercises that see an annual spike in tensions on the divided peninsula.

In a "historic" speech to the ruling party's Central Military Commission (CMC), Kim said the army had to be "fully ready to react to any form of war to be ignited by the enemy," state media said Monday.

The CMC meeting followed on the heels of a North Korean military drill -- personally overseen by Kim -- that simulated an attack on a frontline South Korean island.

Participating in the drill were artillery units that shelled the South's Yeonpyeong island in 2010, killing four people and briefly triggering concerns of a full-scale conflict.

Stressing the need for the Korean People's Army (KPA) to "focus all its efforts on rounding off combat readiness," Kim spoke of the need to simplify and reorganise the KPA "machinery," the official KCNA news agency said without elaborating.

The report said the commission also discussed a "radical turn" in national defence operations, but again there were no details.

North Korea has conducted three nuclear tests, and recently threatened a fourth, amid tensions over fresh US sanctions and UN moves to censure Pyongyang for its human rights record.

Those tensions are likely to rise further next month when the United States and South Korea launch their annual Key Resolve and Foal Eagle military exercises.

Seoul and Washington insist the drills are defensive in nature, but they are regularly condemned by Pyongyang as provocative rehearsals for invasion.

In his speech, Kim, who is chairman of the CMC, also noted "deviations" in the work of the KPA over the past year.

Although the KCNA report did not elaborate, it said Kim insisted on a "strategic line to be always held fast."

Since taking power following the death of his father Kim Jong-Il in 2011, Kim Jon-Un has moved to fill the top ranks of the military with a new generation of officers loyal to his leadership.

Responding to the CMC meeting, the South Korean government said it would "keep a close watch" on the outcome, but added it was unclear if it presaged any significant strategic change.

"It's always hard to predict the direction of North Korea's policy," said Unification Ministry spokesman Lim Byeong-Cheol, who urged Pyongyang to avoid any dangerous escalation during next month's joint drills.

"North Korea should stop taking issue with the joint military exercises, which are defensive and held annually in a transparent way," he said.