The South Korean and US militaries have begun a major annual joint exercise to test defences against North Korea, with Pyongyang denouncing the drill and vowing to strengthen its nuclear deterrent.

Washington played down the North's threats.

More than 30,000 US troops, including most of those based in the South plus 3,000 from overseas, are taking part in the exercise known as Ulchi Freedom Guardian, which began Monday, US forces said in a statement.

Seoul's defence ministry could not say how many South Korean troops were taking part but Yonhap news agency put the number at 56,000.

The drill, which runs until August 31, does not involve field training and is largely a computer-simulated exercise, with troops staying at their normal bases.

US and South Korean forces insist it is defensive while the North called it a drill for a preemptive nuclear attack.

"The prevailing situation requires (North Korea) to bolster up the war deterrent physically and goes to prove that it was entirely just when it determined to fully reexamine the nuclear issue," the North's foreign ministry said.

Its atomic ability "serves as a just means for retaliation", it said in a statement published by state media.

"This is an all-powerful treasured sword for protecting the sovereignty of the country and a powerful means for deterring the war on the Korean peninsula," the ministry said.

In Washington, State Department spokeswoman Victoria Nuland said that the joint exercise was "routine" and "well understood".

"These kinds of North Korean threats are not uncommon," she told reporters. "Obviously we would call on them to refrain from those kinds of bellicose statements."

General James Thurman, commander of the 28,500 US troops based in the South, called Ulchi Freedom Guardian "a key exercise in strengthening the readiness of Republic of Korea (South Korean) and US forces".

On the eve of the drill, the North's leader Kim Jong-Un visited a frontline artillery unit that carried out the deadly 2010 bombardment of a South Korean island near the disputed western sea border.

Kim praised its personnel as heroes and told them never to tolerate enemy aggression, the North's official news agency reported Saturday.

The two Koreas have remained technically at war since their 1950-53 conflict ended in an armistice, without a subsequent peace treaty.

Cross-border tensions have been high since the South accused the North of torpedoing one of its warships with the loss of 46 lives in March 2010.

The North denied the charge but shelled the border island in November that year, killing four South Koreans.

About 20 activists gathered outside the biggest US army base in Seoul's Yongsan district to protest at the exercise, displaying banners reading "Stop UFG (Ulchi Freedom Guardian)!" and "Sign Peace Treaty".

"This is a war game and a physical threat to the North," they said in a statement, adding that the drill heightens tensions on the peninsula.