North Korea and South Korea Exchange Fire Near Western Maritime Border

VIDEO: North Korea Fires on South KoreaPlay
WATCH Koreas on the Brink of War?

Tensions escalated on the Korean peninsula today as the two Koreas exchanged fire for the fourth time in recent years near the western maritime border.

North Korea fired artillery shells at Yeonpyeong Island, some landing in sea but some landing on the island's residential area, said Col. Lee Bung-Woo, a spokesman for South Korea's Joint Chiefs of Staff.

The South responded with its own artillery fire.

South Korean media is reporting that 60 to 70 houses in the fishing village and areas in the mountains are on fire, engulfed in thick smoke.

Authorities said two South Korean soldiers were killed and 16 others were injured.

North Korea, South Korea Exchange Artillery FirePlay

North Korea targeted the most populated area of the Yeonpyeong Island, bombarding village halls and telecommunications facilities.

At least three civilians have been hurt.

According to Lee, South Korean naval forces were conducting a routine drill in the waters near the island earlier in the morning.

"North Korea has sent a letter of protest over the drill," said Kim Hee-jung, spokesperson for the South's President Lee Myung-bak. "We're examining a possible link between the protest and the artillery attack." Reports also say North Korea repeatedly sent warnings to stop the exercises before firing the artilleries.

The South has upgraded the military's posture to its highest non-wartime alert, the defense ministry said. The Air Force has deployed fighter jets to the island and the government has ordered all residents in nearby west sea islands to evacuate.

A statement from the press office warned of retaliation.

"The firing of artillery by North Korea against Yeonpyeongdo constitutes an indisputable armed provocation against the Republic of Korea. Making matters worse, it even indiscriminately fired against civilians. Such actions will never be tolerated," it said. "The South Korean military will retaliate against any additional acts of provocation in a resolute manner."

U.N. Secretary General Ban Ki Moon called the attack one of "gravest incidents since the end of the Korean War" and said he "is deeply concerned by the escalation of tension on the Korean peninsula."

The White House also condemned the attack.

"The president is outraged by this action," deputy press secretary Bill Burton told reporters today. "We stand shoulder to shoulder with South Korea. ... North Korea has a pattern of doing things that are provocative. This is a part of that pattern."

President Obama, who was headed to Indiana, was not expected to speak on the subject there. Obama is expected to call South Korean President Lee today, and other world leaders, to discuss what actions to take.

The president's national security team met this afternoon to discuss the issue.

There were no U.S. forces involved in the annual South Korean training exercises, according to Pentagon spokesman Col. Dave Lapan. In years past, U.S. marines have participated in the exercise, but a scheduling conflict prevented their participation this year. Planning is still underway for a joint U.S.-South Korean exercise in the Yellow Sea, but the timing hasn't been announced.

Defense Secretary Gates called his South Korean counterpart today and reiterated the U.S. stance against "this act of aggression."

"In a phone call this morning, Secretary Gates told Minister Kim the United States strongly condemns the attack by North Korea, views it as a violation of the armistice agreement and assured him that we are committed to South Korea's defense," Pentagon Press Secretary Geoff Morrell told reporters. "He expressed sympathy for the loss of life and appreciation for the restraint shown to date by the South Korean government."

Preventing the Escalation of the Clash

President Lee Myung-bak convened a national ministers' security meeting to discuss countermeasures at his underground bunker office and instructed his secretaries to stem spread of the armed clash.

"(We) should carefully manage the situation to prevent the escalation of the clash," said Lee.

The western sea border has been at the center of dispute where the two Koreas fought bloody skirmishes in 1999, 2002, and most recently November 2009. But this is the first time since the end of the Korean war in 1953 that North Korea has fired on South Korea's civilian territory.

The exchange of fire comes days after North Korea revealed its upgraded and strengthened uranium enrichment plant to western scientists.

Siegfried Hecker, the Stanford professor and former head of the Los Alamos lab who was invited to North Korea last week to witness their new uranium program, said today the country's nuclear capability is much farther along than previously estimated.

The White House released a statement early this morning condemning the attack: "The United States strongly condemns this attack and calls on North Korea to halt its belligerent action and to fully abide by the terms of the Armistice Agreement. The United States is firmly committed to the defense of our ally, the Republic of Korea, and to the maintenance of regional peace and stability."

National Security Advisor Tom Donilon called President Barack Obama and woke him up at 3:55 a.m. to update him on the situation.

Stephen Bosworth, U.S. envoy on North Korea, raised concerns about North Korea's actions during his meetings with Chinese officials in Beijing today, but as of now, there has been no change in his travel plans. Bosworth, who was in Seoul and Tokyo earlier this week for consultations on North Korea's newly unveiled uranium facility, is slated to return to the Unites States tomorrow.

ABC News' Jake Tapper, Kirit Radia, Luis Martinez and the Associated Press contributed to this report.