Clinton did not elaborate on what kind of options are on the table saying it was "premature" at the moment. But it could no longer be "business as usual," she said at a press conference in Tokyo, Japan earlier today.
Pyongyang swiftly responded by denying that North Korea had "nothing to do with the sunken ship" and criticized the Obama administration for "endorsing, protecting, and fabricating" the report.
In a Foreign Ministry statement through its state-run Central News Agency, North Korea also warned that they will not "allow any actions" by the international community. On Wednesday, it had threatened it will go in an all-out war if countermeasures are enforced.
Following a two-month long investigation, a team of multinational experts had concluded on Wednesday that it was an explosion from a North Korean torpedo, likely from a submarine, that split the South Korea patrol boat in half, killing 46 sailors near the disputed maritime border between the two countries.
Pyongyang has threatened a military response to any harsh South Korean or international response to the incident. A senior U.S. official, however, downplayed the statements saying, "I don't see those statements as threatening a preemptive strike by North Korea. They were authoritative but they did not make that threat."
Senior American officials said the U.S. forces have stepped up vigilance in the region since the South Korean ship was sunk, but they added that they have not seen any evidence that this is the first step towards war from either side. Standing between both sides are 28,500 American troops.
South Korea and Japan are considering tougher sanctions through the U.N. Security Council, but Clinton will face a reluctant Chinese government in the U.N. Security Council, the last remaining ally and a major donating country to the impoverished North.
Clinton Warns North Korea of "Consequences"
South Korean President Lee Myung-bak called the torpedo attack a violation of the U.N. Charter and truce that ended in 1953. At an emergency national security meeting today in Seoul, Lee said his people were attacked in "a military ambush" and his government's countermeasure will be "systematic and firm" towards the North.
Washington wants Seoul to take the lead, but all nations involved, including South Korea, are cautious over fear that harsh actions could provoke another form of North Korean hostility and escalate tensions in the region.
Clinton, who is traveling on to Shanghai, China, will visit the U.S. pavilion at the Shanghai World Expo on Saturday, then head to Beijing for two days of talks on a wide range of issues including trade, the value of the yuan and the international standoff on Iran.
While in Tokyo, Clinton also discussed the issue of relocating a key U.S. Marine base on the southern island of Okinawa where half the 47,000 U.S. soldiers in Japan are stationed. Japanese Prime Minister Yukio Hatoyama had set a deadline to move out by the end of May, but the two countries have not come to an agreement as to where the new location should be.
In a 2006 agreement, the Marine Corps Air Station Futenma was to move to a less crowded part of Okinawa, but the Japanese government as well as the local population prefers the air station to move off the island.
"We both seek an arrangement that is operationally viable and politically sustainable," Clinton said at the Tokyo conference with her counterpart Foreign Minister Katsuya Okada. "We have committed to redoubling our efforts to meet the deadline."
ABC News' Kirit Radia contributed to this report