North Korea denies sinking a South Korean warship and is threatening "all-out war" should its neighbour retaliate.
An investigation made public Thursday indicates North Korea fired a torpedo that sank a South Korean ship in March, but a spokesman for the accused nation maintains the evidence has been fabricated by Seoul.
North Korean naval spokesman Col. Pak In Ho warned that any attempts to strike back would escalate hostilities between the two rival countries.
"If (South Korea) tries to deal any retaliation or punishment, or if they try sanctions or a strike on us .... we will answer to this with all-out war," Ho told broadcaster APTN in an exclusive interview in Pyongyang.
Experts say South Korea has little recourse beyond appealing to its international allies, which include Canada. Foreign Affairs Minister Lawrence Cannon pledged his support Thursday.
"Canada strongly condemns this violent act of aggression by the North Korean regime, which has once again demonstrated reckless and unacceptable behaviour," the minister said in a Montreal news conference about Canada's priorities for the upcoming G8 and G20 summits.
"We are closely consulting with South Korea and our allies, and we will continue to support South Korea in the best way forward to take North Korea to task."
The United States called the sinking an "act of aggression" and a violation of the truce that ended the Korean War in 1953. Japan is also backing South Korea.
Canadian technical experts were among an international team that earlier revealed a North Korean submarine launched the torpedo that sunk the Cheonan on March 26. The attack killed 58 sailors and marked South Korea's worst military disaster since the Korean War.
President Lee Myung-bak said South Korea plans to even the score, and called an emergency security meeting for Friday.
But South Korea's hands are largely tied due to the armistice, which bars the country from responding with force, experts say.
"The sad reality is, there's not much that South Korea can do, other than try to mobilize international opinion," Elliot Tepper, an international affairs and security expert at Carleton University, told CTV News.
"They could beef up naval patrols, they could certainly increase their security threat level, they can take minor military actions, but Seoul is held hostage -- absolute hostage -- to the artillery just across the border in the North, which can level the capital city in minutes in a blaze of fire."
Tepper believes a strategic international response could neutralize the potentially explosive situation -- and even reopen talks on North Korea's nuclear experiments.
"The key hope here, I believe -- the longer term hope -- is that somehow all this will work to the advantage of leveraging China to leverage North Korea back to the six-party talks," he said.
"Because the key thing here is really the nuclear issue, and that can only be handled in the multilateral forum of the six-party talks, which have been broken up since the last nuclear tests."
A series of widely condemned nuclear tests last year prompted the United Nations to ramp up its financial sanctions against North Korea. South Korea's Foreign Minister Yu Myung-hwan said Seoul may approach the UN Security Council once more.
Any new action from the Security Council would need approval from China, a permanent seat holder and North Korea's traditional ally. Experts say it is unlikely China will accept the report blaming North Korea for the sinking.
When presented with the findings, Vice Foreign Minister Cui Tiankai responded by stressing the need to keep the peace between the two Koreas.
North Korea has been accused of repeatedly attacking South Korea over the years, but has always maintained its innocence. South Korea has never struck back militarily.
Most of the clashes in the past two decades have taken place around the ill-defined borders in the waters. Several have unfolded in the area where the Cheonan sank.
