South Korea said today that it would delay indefinitely the delivery of crucial food aid to North Korea because of this week's ballistic missile tests but it would stand by its policy of engagement with its neighbour.

"We promised to ship 100,000 tonnes of fertiliser aid to the North but we will shelve it. We will also put off 500,000 tonnes of rice aid until any breakthrough is made in the missile issue," a senior South Korean official said.

But Seoul announced earlier that it would still go ahead with ministerial talks with the North on July 11-14 in the southern port of Busan, the highest-level standing dialogue between the two Koreas.

Meanwhile, a war of words between Japan and North Korea heated up after Pyongyang demanded that Tokyo backs down on its decision to impose sanctions because of the Communist state's decision to test-fire seven missiles on Wednesday.

The Government of President Roh Moo-Hyun was left embarrassed when Pyongyang fired seven missiles, including a new Taepodong-2 which is said to be able to hit Alaska or Hawaii but quickly crashed into the Sea of Japan. Seoul had urged the North against the tests but also played down US warnings of an imminent launch.

Mr Roh told an emergency Cabinet meeting today that the South needed to keep channels of communication open. "While we have to deal sternly with any wrong behaviour by the North, it is necessary for us to maintain the momentum of dialogue to engage Pyongyang and resolve pending issues diplomatically," he said.

Relations between the two have been historically strained but have taken a sharp turn for the worse since the missile tests.

Song Il-Ho, the North’s envoy to talks on normalisation of diplomatic relations with Japan, said: "We said that we would take stronger physical actions, should criticism against (North Korea) become even stronger. That comment was made with Japan in mind.

"Japan occupied Korea with its military 40 years ago but settlement for that past has not yet been finished," Mr Song told Japanese reporters in Pyongyang, blasting Tokyo’s demand for sanctions as "preposterous".

Japan was swift to slap sanctions on North Korea after Pyongyang launched a volley of missiles in its direction. Its measures including a ban on diplomats, charter flights and a ferry between the two countries.

Tokyo protested strongly about the inflammatory comments from the North Korean official. "It was extremely regrettable and we feel resentment," said Shinzo Abe, the Chief Cabinet Secretary.

South Korea has already shipped 150,000 tonnes of fertiliser to the North this year and promised at the previous Cabinet-level meeting in April to offer an additional 200,000 tonnes. North Korea also requested 500,000 tonnes of rice, the same amount sent last year, although Seoul had not formally responded to the request.

North Korea suffered a devastating famine in the 1990s and has relied for the past decade on outside help to feed its 23 million people, with South Korea the biggest donor.

The United States stepped up its pressure on China to take stronger action over the missile crisis, with the chief US envoy on the issue holding a day of talks in Beijing. Christopher Hill, the chief US negotiator for the six-nation talks on North Korea’s nuclear programme, landed in China on the first leg of a hectic Asian tour that will also take him to Seoul and Tokyo.

Mr Hill went straight into a meeting with China's chief negotiator on the issue and also met Li Zhaoxing, the Foreign Minister. He told reporters afterwards that the stalled six-nation talks should resume but that was no agreement on the contentious issue of sanctions.

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