North Korea
North Koreans including soldiers attend a rally in support of North Korean leader Kim Jong-un's order to put its missile units on standby in preparation for a possible war against the U.S. and South Korea, in Pyongyang March 29, 2013, in this picture released by North's official KCNA news agency on Friday.Reuters

Amid the growing tension in the Korean peninsula, North Korea on Saturday said that it was entering a "state of war" with South Korea.

A war-like situation has developed in the Korean peninsula with North Korea continuing to spell out angry rhetoric against the United States and South Korea following their joint military drill and the UN's new sanction on the impoverished country for conducting a nuclear test in February.

"From this time on, the North-South relations will be entering the state of war and all issues raised between the North and the South will be handled accordingly," North Korea's official KCNA news agency said in a statement.

North Korean supreme leader Kim Jong-un on Friday put its missile units on standby to attack U.S. military bases in South Korea and the Pacific, after two nuclear-capable B-2 bombers belonging to the United States was spotted flying over the Korean peninsula.

Pyongyang had earlier cut off the Red Cross hotline and military hotline with South Korea in an attempt to sever all ties.

"Under the situation where a war may break out at any moment, there is no need to keep north-south military communications which were laid between the militaries of both sides," KCNA news agency had quoted a military spokesman as saying.

Meanwhile, the inter-Korean industrial park in the North Korean border city of Kaesong is running normally despite Pyongyang's continuous threats to attack South. Hundreds of South Korean workers cross the heavily armed border daily for work at Kaesong industrial zone, which is the source of hard currency for the impoverished country.

Kim Jong Un had earlier told its troops to be on alert for a potential war. Pyongyang even threatened to strike the US with nuclear weapons and claimed that it has scrapped the 60-year-old Armistice Agreement 1953 that ended the Korean War.

Despite continuing threats, analysts are of the opinion that Pyongyang would not go to war but try to force the US and other countries to opt for negotiations.