By Julian Ryall
The attack on the 1,220-ton Cheonan, which sank on March 26 with the loss of 46 of its 104 crew, was carried out in retaliation for a skirmish between warships of the two nations' navies in November of last year, South Korea claims.
The South Korean government has refused to comment officially on the reports but Defence Minister Kim Tae Young told a parliamentary session that the military believed that the sinking was a deliberate act by North Korea.
Officials in military intelligence say they warned the government earlier this year that North Korea was preparing a suicide-squad submarine attack on a South Korean ship.
"Military intelligence made the report to the Blue House [the presidential office] and to the Defence Ministry immediately after the sinking of the Cheonan that it was clearly the work of North Korea's military," a military source said.
"North Korean submarines are all armed with heavy torpedoes with 200kg warheads," the source said.
Experts who examined the ship, which sank in the Yellow Sea, say that the blast happened outside the vessel's hull, ruling out the possibility of an accident.
North Korean officials who have defected to South Korea but still have contact with North Korean military sources say they have been told that the attack was carried out on the orders of Mr Kim and involved a unit of 13 specially trained commandos and modified midget submarines.
The submarines were manoeuvred close to their target before being detonated, probably along with their crews. Alternatively, the attackers may have used timed charges.
If North Korea was behind the attack, it would be the bloodiest single incident since an uneasy truce brought the Korean War to an end in 1953.
It also leaves Lee Myung Bak, the South Korean president, with a decision to make on retaliation or ignoring the provocation according to analysts.
"This puts Lee in a very difficult situation, but I do not think that an Israeli-style, targeted response is likely," said Aidan Foster-Carter, an expert on Korean affairs at Leeds University. "That is because the United States won't have it and there is the danger that any retaliation will descend into a horrible war."
Describing the attack as "calibrated and deniable," South Korea has little choice but to take its complaint to the United Nations, he said, although that is unlikely to have any impact on the North Korean regime and will not assuage public anger in the South.
The reports come a day after two North Korean agents posing as defectors were arrested for plotting to assassinate Hwang Jang-yop, the highest-ranking member of the North Korean Workers' Party to defect to the South.
Commenting on the sinking of the Cheonan, Mr Hwang said: "It's obvious that Kim Jong-il did it. We know that he has been preparing for this kind of incident."
The North has denied involvement in the sinking, saying the government in Seoul is using the incident to whip up support ahead of elections in June.
However, following the skirmish with South Korea in November, in which a North Korean ship was set on fire and three sailors killed, The National Defence Commission, North Korea's most powerful military body, threatened a "holy retaliatory war".