North Korea urged South Korea Thursday to offer an apology over the alleged defamation of Pyongyang's milestone festival, a day after its military threatened to blow up Seoul.

The latest harsh rhetoric comes amid tensions following the North's failed rocket launch last week. The U.N. Security Council has condemned the launch and called on member states to find ways to tighten sanctions on the communist country.

The North Korean government accused South Korea of insulting the North's dignity over the celebrations marking the centennial of the April 15 birth of the country's late founder Kim Il-sung, the grandfather of current leader Kim Jong-un.

President Lee Myung-bak said last week the North's rocket launch is estimated to have cost Pyongyang about US$850 million, and the destitute North could have spent the money to buy 2.5 million tons of corn, an amount that is enough to make up for food shortages in the country for six years.

South Korea also estimated that the North separately spent some US$350 million on the milestone anniversary for propaganda purposes as well as renovating its landmark hotel, the equivalent of feeding its 24 million people for 100 days.

The North's government accused South Korea of fabricating the costs of the centenary anniversary, claiming Seoul's move is aimed at tarnishing the North's image and undermining its internal unity.

North Korea will stage a "sacred war to wipe out the group of traitors unless South Korea immediately apologize for insulting"

the anniversary celebrations, the North Korean government said in an English-language dispatch carried by the country's official Korean Central News Agency.

A spokesman of the Unification Ministry, which handles inter-Korean affairs, was not immediately reached for comment.

On Wednesday, the North's military also vowed to mercilessly retaliate against South Korea for hurting the dignity of its supreme leadership. Some South Koreans have recently held anti-Pyongyang events in Seoul.

"As even the heart of Seoul is served as a base for provocative acts of hurting the dignity of the (North)'s supreme leadership, the (North) will take a special action to blow up everything there," the Supreme Command of the Korean People's Army warned in an English-language statement carried by the KCNA.

Seoul, the South Korean capital city of more than 10 million people, is within range of North Korea's artillery.

The North has long bristled at any outside criticism of its leader and has made similar threats against the South over the past several months, although no actual attack has occurred yet.

South Korea has repeatedly vowed to avenge any North Korean attacks following the North's two provocations in 2010 that killed 50 South Koreans, mostly soldiers. (Yonhap News)