South Korean officials have said they will hold talks with officials from North Korea in a bid to defuse tensions.

The meeting will take place at the border village of Panmunjom at 6pm Seoul time (11am Malta), which is 30 minutes after the deadline set by Pyongyang for Seoul to to dismantle loudspeakers broadcasting anti-North Korean propaganda.

According to officials in Seoul, South Korea will be represented by presidential national security adviser Kim Kwang-jin and Unification Minister Hong Yong-pyo, while North Korea will send senior officials Hwang Pyong So and Kim Yang Gon.

North Korea has threatened war unless Seoul dismantles its loudspeakers along the border.

Conditions are calm in the South, with weekend traffic reported to be close to normal.

Border town residents remain at home after returning from shelters in the wake of cross-border artillery fire on Thursday.

North Korea also permitted more than 240 South Koreans to enter a jointly-run industrial complex at its border city of Kaesong.

On Thursday, South Korea fired dozens of artillery rounds across the border, saying North Korea had fired first to back up a threat to attack the loudspeakers.

North Korean leader Kim Jong Un had declared his frontline troops in a "quasi-state of war" and ordered them to prepare for battle a day after the most serious confrontation between the rivals in years.

The spike in tensions prompted the US and South Korea to halt an annual military exercise that began this week.

North Korea had criticised the drills, calling them a preparation for invasion, although the US and South Korea insist they are defensive in nature.