North Korea staged an artillery drill today within earshot of a South Korean island shelled earlier this week, and warned that an upcoming US-South Korean naval exercise heightens the risk of war.

Seoul named a former military chief as its new defence minister to try to restore confidence in the armed forces, after their allegedly feeble response to Tuesday's deadly bombardment of Yeonpyeong island.

China, the North's sole major ally, warned Friday against military activity in its exclusive economic zone, echoing remarks it made a day earlier opposing the war games.

The distant sound of the latest shelling sent residents of the front-line border island scrambling for air raid shelters, though South Korea said it appeared to be an exercise and no shells landed on its territory.

The top US commander in South Korea, General Walter Sharp, visited Yeonpyeong during the brief panic.

He denounced Tuesday's attack -- which killed two civilians and two marines, injured 18 other people and set buildings ablaze -- as a violation of the armistice which ended the 1950-53 war.

The bombardment was the first to hit civilian areas in the South since the war and sparked widespread anger. Seoul's response drew strong criticism from newspapers and Kim Tae-Young stepped down Thursday as defence minister.

President Lee Myung-Bak on Friday named Kim Kwan-Jin, former chairman of the Joint Chiefs of Staff, to the post.

Hong said the new minister, 61, was expected "to restore people's trust in the military and enhance military morale".

A US aircraft carrier battle group was heading for the Yellow Sea for the four-day drill starting Sunday, a show of force designed to deter the North.

Pyongyang, unrepentant over its barrage, criticised "the US imperialists and South Korean puppet war-like forces" for what it called an exercise in "sabre-rattling".

"The situation on the Korean peninsula is inching closer to the brink of war due to the reckless plan of those trigger-happy elements to stage again the war exercises targeted against the (North)," its official news agency said.

Pyongyang has used such language frequently in the past. It was unclear whether it would try to disrupt the drill.

China has previously come out strongly against such exercises in its backyard, saying they risk exacerbating tensions.

On Friday, Chinese foreign ministry spokesman Hong Lei said: "We hold a consistent and clear-cut stance on the issue. We oppose any party to take any military actions in our exclusive economic zone without permission."

The US military says the exercise is defensive and was planned well before the North's "unprovoked artillery attack," but that it demonstrated the US "commitment to regional stability through deterrence".

The North has justified its firing Tuesday as retaliation, after South Korea allegedly lobbed shells into its waters during an exercise.

In response, the South fired 80 shells at the North's coastal artillery positions but says it did not call in air strikes to avoid escalating the conflict.

The South will send more troops and guns to five front-line islands and said it would change the rules of engagement to let its military hit back harder against any future attacks.

The North, in another statement Friday, vowed to stage such attacks if there is any further "provocation" by the South.

President Lee paid tribute to the two dead marines, burning incense and laying flowers at altars set up in a Seoul military hospital.

Parts of Yeonpyeong island resembled a war zone Friday, an AFP correspondent reported. Stray dogs searched for food after their owners joined an exodus of hundreds of villagers to the mainland.

Some residents fled the island for fear of more shelling from the North when the joint naval exercise starts, policeman Kang Sang-Beom said.

Fears also spread to other front-line islands.

Residents were on a knife-edge on Baengnyeong island, located near the spot where, according to a multinational expert panel, a North Korean submarine in March torpedoed a South Korean warship, killing 46 sailors.

"It feels like the calm before the storm, ahead of the US-South Korea joint exercise that will begin Sunday," a 37-year-old local government official told AFP by phone.

"After seeing what happened to Yeonpyeong island, many residents feel nervous and they want to get off this island."

Many observers believe this week's attack was meant to highlight the military credentials of the North's heir apparent, Kim Jong-Un, youngest son of leader Kim Jong-Il.