SEOUL (AFP) - North Korea vowed Sunday to strengthen its nuclear weapons, a day after announcing it is in a "state of war" with South Korea, and said it would never trade its atomic deterrent for aid.

Tensions have risen sharply since the United Nations tightened sanctions in response to the North's nuclear and missile tests, and since the United States and South Korea launched military drills south of the border.

On Saturday the North declared it was in a "state of war" with the South and warned Seoul and Washington that any provocation would swiftly escalate into an all-out nuclear conflict.

A meeting Sunday of the central committee of the ruling Workers' Party, chaired by leader Kim Jong-Un, decided that the country's possession of nuclear weapons "should be fixed by law", the official KCNA news agency reported without elaborating.

The nuclear armed forces "should be expanded and beefed up qualitatively and quantitatively until the denuclearisation of the world is realised", it added.

Members also decided to develop a light water reactor as part of a civilian nuclear power industry to ease electricity shortages, KCNA said. The North in 2010 disclosed the existence of a uranium enrichment facility and a light water reactor, purportedly to generate power.

Experts said it could easily be reconfigured to make fuel for nuclear weapons, supplementing the existing plutonium weapons programme.

The North in April 2009 formally abandoned six-party talks which offered it economic and security benefits in return for denuclearisation.

On Sunday it reiterated that its atomic weapons are not a bargaining chip. "They are a treasure of a reunified country which can never be traded with billions of dollars," KCNA quoted the central committee members as saying. The meeting vowed to push both for economic construction and nuclear development, with efforts to develop agriculture and light industry and to stabilise living standards.

"The country's economy should be shifted into knowledge-based economy and the foreign trade be made multilateral and diversified and investment be widely introduced," the news agency reported.

Efforts should be made to develop space science and technology, including the launching of more advanced satellites including communications satellites.

Pyongyang says its long-range rocket launches are aimed at putting satellites into orbit for peaceful purposes. The United States and other nations say the real purpose is to test banned ballistic missile technology.

Meanwhile, an inter-Korea joint industrial complex, which lies inside North Korea, was operating normally on Sunday despite the North's threat to shut it down, a Seoul official said.

The complex in the city of Kaesong, just north of the border, was running as usual after Pyongyang warned of a potential closure as it declared a "state of war" with the South on Saturday, said Seoul's Unification Ministry.

"There has been no problem so far in operations of the Kaesong complex," a spokesman of the ministry handling cross-border affairs told AFP without elaborating.

The Kaesong Industrial Complex, which lies 10 kilometres (six miles) inside North Korea, was built by the South in 2004 as a symbol of cross-border cooperation.

Around 53,000 North Koreans work at plants for 120 South Korean firms at the complex, which serves as a crucial source of hard currency for the impoverished communist state.