South Korea will be to strengthen its army pressure on five islands near to North Korea, amid tensions over a clash that left four people dead.
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It should also evaluate army policy around the use of pressure, amid worries it had come to be "rather passive".
North Korean shelling of a South Korean island on Tuesday killed two civilians and two marines, and prompted a rise in regional stress.
China, which has not apportioned blame, urged each side to show "restraint".
North Korea, meanwhile, has threatened further army motion if South Korea continues on what it referred to as a "path of army provocation", the North's official KCNA news company reported.
Pyongyang has blamed Seoul for this week's incident on Yeonpyeong island. The South was holding army exercises while in the spot with the time, and returned artillery hearth subsequent the North Korean shelling.
The North also accused the united states of stoking tensions - saying the US helped draw up the "illegal" western maritime border among the two Koreas.
About 28,000 US forces are stationed in South Korea.
Troop raise
The clash was one particular of your worst incidents among the two Koreas, who continue to be technically at war subsequent the 1950-53 Korean War.
The shelling set alight numerous homes on a South Korean island pretty near for the disputed western maritime border, killed four people and injured many extra.
After holding an emergency cabinet meeting, South Korea introduced it will dramatically raise its army ability while in the spot.
"[The government] has made a decision to sharply raise army pressure, like floor troops, around the five islands while in the Yellow Sea and allocate extra of its spending budget towards dealing with North Korea's asymmetrical threats," the presidential senior public affairs secretary, Hong Sang-pyo, instructed reporters.
He stated the federal government had also made a decision to produce new rules of engagement "to adjust the paradigm itself of responding to North Korea's provocation", describing the current rules as "rather passive".
The BBC's Chris Hogg says the cabinet had made a decision that while in the existing rules of engagement there was too much emphasis on preventing a army incident escalating into a thing worse.
There is certainly now an awareness that this contemplating had to adjust, our correspondent says.
In long run the South would put into action diverse levels of response depending on no matter whether the North Koreans attacked the army while in the South or civilian targets, the spokesman stated.
The US and South Korea are to carry joint naval exercises while in the coming days south of Yeonpyeong island.
A overseas ministry spokesman in Seoul stated the selection had been manufactured in the course of a mobile phone dialog among US Secretary of State Hillary Clinton and South Korean International Minister Kim Sung-hwan on Thursday.
"We agreed that via the drill, we'll be able to deliver a clear message for the North," the spokesman stated.
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