South Korea's military was on alert on Wednesday for any retaliatory moves after a North Korean patrol boat was set ablaze in a naval clash, as Washington warned Pyongyang against escalating tensions.

Defence Minister Kim Tae-Young ordered army, navy and air force commanders in charge of border areas to step up surveillance and respond immediately to any provocation, a spokesman for Seoul's Joint Chiefs of Staff said.

Tuesday's clash near the disputed Yellow Sea border raised tensions just over a week before US President Barack Obama arrives in Seoul as part of an Asian tour.

White House spokesman Robert Gibbs called on the North to avoid any further actions "that could be seen as an escalation".

But Washington also announced it was accepting an invitation to send an envoy to Pyongyang to try to bring the communist state back to nuclear disarmament talks.

The State Department said the US envoy to North Korea, Stephen Bosworth, would visit at an appropriate time, probably before year-end.

Military sources quoted by Seoul newspapers said one North Korean sailor was killed and three wounded in the brief but fierce exchange of fire.

The defence ministry said it could not confirm the figure. No South Koreans were injured.