South Korea may suspend shipments of its surplus rice to the impoverished North in response to Saturday's sea battle between the two states' navies.

The agriculture ministry in Seoul said it was inappropriate to send the rice aid after the deaths of four of its sailors, and given the public mood.

The threat is the latest in a diplomatic escalation since the battle, which both sides have blamed on each other.

A South Korean frigate was sunk in the battle

Seoul announced in April that it would offer about 300,000 tonnes of rice to the North on credit as a way of dealing with its own oversupply, which was threatening farm prices.

This is separate from the 100,000 tonnes of corn which Seoul has sent to North Korea this year through the UN World Food Programme (WFP).

It may now consider giving its rice surplus to other disadvantaged countries, the agriculture ministry was reported to have said.

The WFP said that any aid cancellations were significant.

"North Korea needs more food than the WFP can mobilise from its donors, and anything that takes from additional supplies will mean that people in North Korea will be deprived," said the WFP's Gerald Bourke.

Deals in doubt

Talks on installing a mobile phone network in the North may also be delayed.

North Korea's food needs

Needs approx 1.5m tonnes food aid in 2002 WFP appealing for 611,000 tonnes Remainder needs to come from bilateral donations

An official from South Korea's Information and Communication Ministry told Reuters news agency that discussions on the deal, announced in June, "are unlikely to be held until the easing of the heightened tension".

For its part, the US State Department said it would no longer be sending a special envoy to North Korea in July to resume bilateral talks.

Spokesman Richard Boucher said that, in addition to Pyongyang's lack of response regarding the meeting, "the violent naval conflict (has) created an unacceptable atmosphere in which to conduct talks".

Mutual blame

In addition to the deaths of the four South Korean sailors in the shooting on Saturday, 19 South Korean sailors were wounded and one was reported missing.

It is thought that 30 North Koreans also died in the worst maritime clash between the two sides for three years, which took place on the border unilaterally imposed by the United Nations after the war, and which the North does not recognise.

South Korean President Kim Dae-jung has demanded that an apology, but North Korean radio has made clear that Pyongyang considers itself the injured party.

It described the clash as a "nasty strategic manoeuvre the South Korean military deliberately fabricated in order to completely aggravate the situation intentionally and mislead public opinion".

The radio added that South Korean fishing vessels had regularly violated the North's sovereignty in the area where the clash took place.

The Koreas remain technically at war as the 1950-53 Korean War ended in a truce, not a peace treaty.

But in recent years, efforts have been made at reconciliation, including a series of organised reunions of families split up by the North-South divide.