The US has warned North Korea it's actions are "dangerous and provocative" and it risks isolating itself further after following through its threat of carrying out live drills.
The White House's comments come after South Korea said it had fired shells into North Korean waters in response to live fire drills carried out by Pyongyang.
Residents of South Korean islands on the front line were evacuated as both countries exchanged fire across their disputed western maritime border.
The South said the North fired more than 500 rounds during a three-hour long drill - 100 of which landed in its waters.
Seoul fired back some 300 rounds from its K-9 self-propelled howitzer batteries and scrambled F-15s on its side of the border in response to what it described as a "premeditated provocation".
South Korea and the US conduct a military exercise in Pohang on MondayKim Min-seok, a defence ministry spokesman, said: "If the North takes issue with our legitimate returning of fire and uses it to make yet another provocation towards our sea and islands, we will make a resolute retaliation."
The de facto maritime border between the two countries - the Northern Limit Line - is not recognised by Pyongyang.
Anxious residents sought refuge in shelters on Yeonpyeong island, where in 2010, North Korean artillery killed four South Koreans.
One islander, Kang Myeong-sung, said he did not see any fighter jets but could hear the boom of the shells.
North Korea had announced it was going to conduct some military drills.
Sky's Asia Correspondent Mark Stone said: "These are worrying developments ... but no one has been injured, no one has been killed and indeed none of these rockets or missiles landed on any military installations or any land, so this is effectively both sides showing their strength."
It comes a day after North Korea warned it had not ruled out a fourth test of its nuclear deterrent in retaliation for the US conducting "madcap nuclear war" exercises in South Korea this month.
Every year the US and South Korea conduct joint battle exercises involving some 12,500 US and as many as 200,000 South Korean troops.
A South Korean MarineOperation Key Resolve is a computer-simulated drill which plays out war-time scenarios that could result from a North Korean invasion of the South, while Operation Foal Eagle is a two-month air, sea and land field-training exercise.
The annual drills are regularly condemned by the North as preludes to a US invasion, though Washington insists the exercises are defensive.
White House spokesman Jonathan Lalley said America remained committed to the defence of its allies, was was working closely with South Korea and Japan.
China called for calm, while Russia said it was worried by Pyongyang's declaration it may conduct a further nuclear test.
Tensions in the area remain high after North Korea tested two missiles capable of hitting Japan last Wednesday.
Stone added: "This is the time of year when tensions on the peninsula always escalate - the South Koreans and the Americans have their own exercises, North Korea claims its can do its own thing and have its exercises.
"The thought always is, that every year, North Korea is becoming more and more technologically advanced - they have nuclear weapons."
The Korean War in the early 1950s did not end with a peace treaty, but an armistice, so technically both sides are still in a state of war.
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