President Lee Myung-bak on Friday urged a "stern and systematic" response toward North Korea for what he called a clear military provocation committed against the South.
"(The provocation act) also violates the U.N. Charter, the Armistice Agreement and the South-North Basic Agreement," the president said during a meeting of the National Security Council, according to the presidential office of Cheong Wa Dae.
Under these related pacts, the two Koreas are bound to refrain from military provocations or invasion.
Lee stressed that the occasion calls for his government to maintain its balance and deal with the North in an unwavering manner so that the reclusive regime does not seek to repeat such a "reckless act of provocation."
"Considering the gravity of the situation, there must be no mistakes, and we must exercise utmost caution," the president said.
In line with Seoul's claims, the U.N. Command's Military Armistice Commission on Friday said it has as formed a special probe team into the Cheonan sinking to investigate the possibility of Pyongyang having violated the 1953 Armistice Agreement, according to military sources.
The 1950-53 Korean War ended in a cease-fire, banning any type of military provocation.
Defense Minister Kim Tae-young on Friday supported the president's remarks, telling the foreign press that the government would ascertain that (North Korea) "pays the due price."
"North Korea has stepped over the line in terms of its hostile activities," he said in a press conference.
The South Korean and U.S. military authorities are currently considering raising the level of surveillance operations on the North by upgrading the "watch condition" to the second-highest level, up from the third-highest.
Kim said the military also may revise the naval combat code to enable the Navy to fire warning shots sooner after it issues warning broadcasts when North Korean vessels violate the Northern Limit Line -- the de facto inter-Korean sea border, or if North Korean troops cross the Military Demarcation Line on land.
Friday's meeting in Cheong Wa Dae's war-room was the fourth of its kind under the Lee Myung-bak administration.
The previous one was held following North Korea's second nuclear test in May.
The National Security Council is the highest-level presidential advisory body for national security and includes related officials such as the prime minister, foreign minister, defense minister and the head of the national intelligence agency.
The presidential office is currently considering upgrading the council to become more vigilant against security threats.
The three-hour meeting followed an announcement by a Seoul-led multinational investigation team concluding that North Korea fired a torpedo to sink one of South Korea's warships on March 26.
A total of 46 sailors aboard the Cheonan were killed. Some of the bodies have yet to be found.
Pyongyang continues to deny its involvement. Ahead of the council meeting, the North renewed threats it had made following the investigation results.
Going a step further, the North also threatened to abandon all inter-Korean projects and deals.
The president and his officials on Friday discussed possible countermeasures to punish Pyongyang for its latest act of aggression.
Proposals for bolstering military defense were reportedly on the agenda, along with ways for enlisting strong international support for penalizing the North via the United Nations.
Seoul plans to refer the issue to the U.N. Security Council, with the backing of the United States.
Such a move, however, would need the support of all five permanent members and certain critical non-permanent members as well in order to pass resolutions with any teeth, those close to the matter said.
Persuading China to join the campaign would be a priority challenge for South Korea, diplomatic sources said on Friday.
Inter-Korean relations also are seen to have been discussed in light of Pyongyang's latest threats.
The Foreign Ministry on Friday held a separate meeting following the National Security Council conference to discuss plausible diplomatic countermeasures.
A clearer outline of the government policies for rebuking the North is expected to be announced when President Lee addresses the public in a live broadcast next week regarding the Cheonan and latest findings involving the North.
In the meantime, US Secretary of State Hillary Clinton said North Korea "must stop its provocative behaviour" after her meeting with Japanese Foreign Minister Katsuya Okada in Tokyo on Friday.