North Korea fired artillery shells at Yeonpyeong island in the South on Tuesday, killing two soldiers, injuring about 20 people and setting houses on fire and causing severe material damage just 120 km west of the capital Seoul.

South Korea's military returned fire and scrambled a fighter jet F-16 in response to the attack, which drew calls for restraint from Beijing, Washington and Moscow, agencies report.

News reports said dozens of houses were on fire, and TV footage showed large plumes of black smoke spiralling from the island, and Reuters reports that inhabitants were fleeing from the island in fishing boats.

A military official stated it was an “illegal North Korean artillery provocation and that South Korean army returned fire in self-defence.”

South Korean President Lee Myung-bak stated he was trying to prevent the artillery fire exchange between two Koreas to escalate into a serious conflict, Yonhap news agency reports.

South Korean army addressed North Korean army, saying they should seize the fire, warning they would respond harder if the provocations continue.

Agencies note that the clash happened at the time of increased tension and alertness after the South Korean officials’ statement that they have a new production drive for enriched uranium.

The incident alerted additionally not only South Korea and the countries in the region, but also world forces appealing to North Korea to shut down its nuclear programme, which they suspect is focused to creating nuclear weapons, while Pyongyang claims is meant strictly for peaceful purposes.