The international community has urged restraint and calmness to safeguard peace and stability on the Korean Peninsula after an exchange of artillery fire between South Korea and the Democratic People's Republic of Korea (DPRK) on Tuesday.

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The latest clash was seen as an omen of further deterioration of the situation on the Peninsula followed a longtime stall of the six-party talks and the sinking of a South Korean warship in late March.

Though Seoul blamed Pyongyang for military provocations, there is still no way to confirm who started the shelling attack.

A statement issued by the DPRK army accused South Korea of setting off the exchange of fire, saying dozens of shells from the south fell in the waters of the DPRK around Yeonpyeong Islet at 1:00 p.m. local time (0400 GMT) Tuesday afternoon. Ensuing shellings were countering measures of the DPRK, it said.

South Korean TV footage showed plumes of black smoke rising from the South Korean island of Yeonpyeong. Two South Korean marines were reportedly killed.

Acknowledging it did fire shots in the area, South Korea denied any of the test shots fell in the DPRK territory, the same area where South Korean corvette Cheonan sank after a mysterious explosion, killing 46 sailors aboard and blockading the resumption of the six-party talks on the denuclearization on the Peninsula.

The incident came as South Korea was engaged in a massive annual military exercises involving some 70,000 troops, launched on Monday and scheduled to last through Nov. 30. Pyongyang has repeatedly warned against such military drills, usually joined by the U.S. soldiers, describing them as provocations and real threats to its security.

"It is a traditional mode of counter-action of the army of the DPRK to counter the firing of the provocateurs with merciless strikes," said the DPRK statement on Tuesday.

If South Korea dared to intrude into the waters of the DPRK, the DPRK will take merciless military counter-actions against it without any hesitation, the statement warned.

South Korea, with nearly 29,000 U.S. troops stationed, has taken a hardline policy toward its northern neighbor since President Lee Myung-bak took office in February 2008.

At present, the foe neighbors are immersed in a deadlock in talks on the denuclearization issue since the DPRK withdrew from the six-party talks in April 2009.